Open the mailbox at the beginning of the month and find a letter of the mortgage payment, another of the term of the car and a third with the invoice of purchases made with the credit card. And even a fourth with that personal credit to make some reforms and change the kitchen. If this scene is familiar to you and you don’t reach the end of the month, you may be considering reuniting debts. You may have heard that concept followed by the statement that if you do you will pay less per month for your loans. But before you get carried away by siren songs, you should know what debt reunification consists of and what it entails.
The first thing you have to know is what it means to reunify debts. As the name implies, it is to collect all the debts that a person has in one loan. It can be done even if debts are held with different banks or companies. There are two ways to do it, under the umbrella of a mortgage, which is the most used option, or as a new personal loan. This second one is usually only granted for small amounts, because the entities do not want to run the risk of losing the borrowed money, taking into account that the applicant has difficulties to pay. That is why it is not easy for the bank to grant it, although if a guarantor comes into play, the possibilities increase.
Gather debts: cheaper?
An example would be the mortgage reunification, where all the debts are included in a single mortgage. What is achieved with this is a reduction of what is paid per month, but the counterpoint is that since the total amount is greater, you have to pay for more years, so you will have to face more interest. So for example you will go from paying 900 dollars in monthly installments, to disburse only 600 dollars, but for more years.
The process entails a series of additional expenses that will have to be studied: early cancellation of the loans, modification of the mortgage, appraisal and visit to the notary, among others. That is why you have to calculate if it really suits you to do so.
If you see that reuniting debts can be a solution for you
It would be best to go to the financial institution where you have your personal loan or mortgage and negotiate with them. Keep in mind that banks are not always willing to carry out the operation and even less if the client has a bad credit history or is included in a list of delinquents.
The option left without the bank does not accept is to go to private equity companies. The best in these cases is undoubtedly not to act on impulse. Before deciding, take paper, pencil and calculator and see if after paying the expenses and facing new interests for more years it really is the best option. Find out about all the conditions of reunification and read the fine print well.