In this article we will know what is the rdebt settlement? its advantages and disadvantages, requirements and conditions, as well as the reunification of debts as financial flexibility.
What is debt reunification?
The reunification of debts refers to the fact of consolidating and/or centralizing all the loans, credits and mortgages in a single debt.
This alternative allows us to consolidate the general debt into a unified particular debt, and consequently the payment in a single consolidated installment, obtaining the possibility of paying much less than what you previously paid for all the installments separately, since it follows of a single loan.
Operation
The way debt reunification works is that applicants must cancel all loans, mortgages and credits to unify them into a new one. In this sense, the financial entity has to carry out a financial study of the client to determine whether or not you can unify your debts.
The specialists in the matter (advisors) analyze the universe contained in the debts and determine a diagnosis, and prior authorization or approval of the interested party, the negotiation process with the banking entities will begin, thus generating a new scheme where the conditions will be determined. payments, interest rate and repayment period.
While the procedure is being executed, the interested party must cancel in advance each of the credits or loans that he has with the financial institution in order to formalize the opening of a new credit, whether it is a mortgage or personal. Now, it is important to tell you that the homeless debt reunification It is possible, it is only up to you to demonstrate that you are financially solvent to cancel your commitments.
Advantages
The convenience of having all payments centralized in the same lower installment, with significant financial comfort.
Disadvantages
- Longer term; This would result in having to pay more interest once the loan has been fully repaid.
- Financial expenses are generated, such as cancellation or early repayment of loans, opening, if any.
- If there is a mortgage, this would require the payment of commissions such as appraisal, notary or the Tax on Documented Legal Acts.
Requirements for the reunification of debts
Like any loan, the financial institution requires that a series of requirements and conditions be met; The most important and/or determining factor has to do with the health of your finances. Determine the income and the situation after the unification of debts. All this scenario is evaluated for the bank in such a way as to guarantee the collection or recovery of your money.
The first requirement is to have payment capacity and some guarantee of reimbursement. That is, you cannot make unsecured debt reunification. In the case of reunification without a mortgage on a property, this guarantee can be personal (your savings and income and even your assets), that of a person who guarantees you (will assume your same obligations against the loan) (Guarantor) or through outstanding balances ( money in pension plans, deposits, investment funds, among others). If this article caught your attention, I invite you to go to the following link that will allow you to deepen the topic of shared mortgage
The large number of debt reunifications are carried out on mortgage loans. Mortgage loans are cheaper in financial terms for the user and provide an additional guarantee for the property. Among the conditions to accumulate loans in a mortgage, the financial institution will require that a considerable percentage of the property be paid off. If you have recently signed the mortgage, it will not apply.
The entity that assumes the risk of unifying the debts will want to have the priority and security that it is the only debtor (exclusivity). This will prevent you from prioritizing the payment of other credits against yours.
Financial expenses generated in Debt Reunification
Most of the financial operations generate a financial cost. Beyond the new interest that you are going to pay, there are three expenses to consider when joining your loans into one:
- Expenses for early cancellation of the loans you already have.
- Expenses of constitution of the new mortgage. It includes the appraisal of the house, the notary and the payment of the Tax on Documented Legal Acts, among other things.
- Expenses in commission payments in case of intermediation.