Debt Consolidation Mortgage: What It Is and How It Works

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I do not want to bore you!! If you know what a debt consolidation loan is and what it is for, skip the next paragraphs without hesitation … If not, follow me.

The usefulness of this type of mortgage is to combine different loans (mortgages, personal loans, assignments of the fifth, consumer loans) into a single loan.

The bank that will provide the new mortgage will pay off all your previous loans by settling the residual debt obtained from the respective extinguishing accounts.

In this way, you can pay a more sustainable installment, against the extension of the payment period (technically a mortgage amortization plan).

You understood well:

SINGLE lower installment, more time to pay, fewer deadlines to remember.

To better understand how it works, I will give you an example from a real case.

Mario’s debt consolidation loan

Mario

The case that I illustrate below concerns Mario (invented name), a civil servant with a wife and son of about 11 years old.

Due to too many installments to pay, Mario was struggling to make ends meet despite having a salary of almost 2000 us dollars.

In fact, each month he had around 1200 us dollars of monthly installments to be paid between mortgage, assignment of the fifth, financing the mobile phone (in the form of a consumer loan) and personal loan.

In addition, Mario had an urge to get some money to buy a car.

In short, there were all the prerequisites for taking out a debt and liquidity consolidation loan.

What we have done?

What we have done?

First of all, I asked Mario to get me the extinct accounts of all the loans open to measure the size of the debts.

Fortunately, the residual debt was such as to leave enough margin for a request for liquidity within the limits of the mortgage ownership.

But this mattered more to Mario than it can interest us.

The second check I did was that payments on installments were punctual (you know banks want to have a “good debtor”).

The other steps:

  1. We have calculated the maximum amount obtainable on the basis of some parameters set by the various credit policies.
  2. Through a pre-feasibility request, we found a credit institution willing to finance it
  3. We ventured into all stages of the banking investigation
  4. We took out the mortgage from the notary

 The 6 steps to obtain a debt and liquidity consolidation loan

The most important thing, however, is that thanks to the debt and liquidity consolidation loan Mario managed to:

  1. Get 20,000 us dollars of liquidity
  2. Bring all the installments together in one installment of 500 us dollars and something
  3. Vary the rate of the previous mortgage from variable to fixed (with significant savings)

After explaining what the debt consolidation mortgage is and how it works, I’ll try to answer a question from a trillion yen:

Is the debt consolidation loan convenient?

Is the debt consolidation loan convenient?

If you have accumulated several debts over time and are having difficulty reaching the end of the month, evaluating a debt consolidation mortgage is probably also convenient for you.

As we saw with Mario’s example, you too could get one of the following advantages:

  1. The grouping of all the installments into a single monthly installment that allows you to meet deadlines more easily
  2. Early repayment of all previous debt exposures
  3. A lower monthly payment
  4. The possibility of obtaining a lower rate by taking advantage of more favorable market moments and choosing a different type of rate compared to the one previously chosen.

The Benefits of Debt Consolidation Mortgage

The Benefits of Debt Consolidation Mortgage

The advantages are not lacking, but you need to check if the mortgage loan is the best solution for you.

Contact me and let’s evaluate together whether it is a viable path for you.

To be passable (or worth the journey) the road, in my opinion, must have at least two characteristics:

  1. lead to the destination you want (your goal)
  2. be suitable for your possibilities (if you are barefoot you will have to choose a different path from those who have boots or those who wear shoes that breathe)

” Before leaving for a long journey ” (if you guess the song mentioned write it in the comments) ask yourself:

“Where do I want to go?”

“Do I have the right tools to get there?”

As trivial as these questions may seem, I invite you to think carefully because when you engage with a bank there are not many ways to get rid of it and your relationship, idyllic or conflicting, will last for a very long time (unless you cheat with a surrogate).

Have you thought about it?

Are you determined to pronounce the fateful yes in front of the notary?

Well, let’s see what requirements you need to possess and what you need to do specifically to apply for a debt consolidation mortgage (regardless if you also want liquidity).

Requirements for taking out a debt consolidation loan

Requirements for taking out a debt consolidation loan

In order to take out a debt consolidation loan, you must have certain requirements:

  1. Be in good standing with the payment of all installments (no bank offers debt consolidation mortgages for bad payers)
  2. Have a mortgage , a personal loan, a loan of the fifth or a consumer loan among the open positions (if you have purchased a phone, an appliance or the like)
  3. Have at least one property on which you can register a mortgage (preferably if it is a first home or where you have the main residence)
  4. Have sufficient liquidity to support the expenses related to the underwriting of a mortgage (taxes, notary fees, possible remuneration of the credit broker )

If you meet all the requirements, proceed with the reading.

How To Get A Debt Consolidation Mortgage

How To Get A Debt Consolidation Mortgage

The request for a mortgage (for any purpose) involves a series of steps that the aspiring borrower should take to prepare for the income investigation of the mortgage application.

Here they are:

  1. Analyze your situation ( creditworthiness, income capacity, debt positions, personal data, property value, etc.).
  2. Find the product and bank that best suits your characteristics. First YOUR FEATURES then RATE. For example, you will choose bank A rather than bank B based on your type of income and the consistency of your monthly income. In this regard, remember that the same income is not seen by every bank in the same way.
  3. Prepare the necessary documentation to submit the loan application (in addition to all the personal and income documents provided for the other types of mortgage, you must present the extinct accounts of the loans you have in progress). The extinct statement is a document issued by a bank or a finance company that specifies your residual debt (all the installments of the loan to be paid and their due dates).

I advise you to quickly complete all the steps to keep up with the updates of credit policies and the oscillation of rates.

Conclusions

Conclusions

If you got this far and read the whole post, now you should know:

  1. What is a debt consolidation mortgage and what is it for
  2. Because a mortgage loan is cheaper than other loans
  3. What are the requirements to get it
  4. What are the necessary steps to take to get high chances of success and avoid flops?

Have you ever had experience with this type of mortgage? Have you ever found yourself with numerous installments to pay without knowing how to do it?

Write it in the comments and let’s talk about it together.