There are few things more stressful than having the feeling that your income and your debts do not correspond. Perhaps it is not that the former are scarce, but that the latter are too many: the car loan, the kitchen reform, credit cards. Among some things and others, the money to be returned each month compromises our finances and drowns our day to day. In these situations, reuniting debts can be an effective solution, and one way to achieve this is through home equity loans.
When does the home equity loan help you?
Resorting to a reunification of debts, as we have said, can bring relief to our finances. But what is this operation based on? We explain it in three simple points:
- Regroup the different installments that we have into one by means of a loan with the total amount of our debts.
- The resulting monthly payment is less than the sum of the installments that we paid up to now.
- This reduction in the monthly payment is achieved by extending the repayment period of the total debt.
Ultimately, reunifying debts means that we will pay more money in total (more interest will end up accumulating) for a longer time (in order to reduce the monthly payment), but we will manage to have a much more comfortable daily economy thanks to a smaller monthly payment.
Let’s put that information into a practical case: let’s imagine that we earn 1,400 dollars a month and between the installments of a personal loan, the reform and those of credit cards we pay 600 dollars. In other words, almost half of our salary is used to pay debts.
With a loan with a mortgage guarantee of 20,000 dollars (in the event that this is the total debt) to be repaid in 10 years at 10% TIN, the monthly fee would be around 270 dollars. Therefore, we would pay less than half a month than before reunifying debts and our daily economy would be more relieved. Conditions such as these we could achieve which allows us to request up to 300,000 dollars to be repaid in up to 20 years with an interest that starts from 8.95% TIN , a very competitive cost for this type of credits.
What should we know about the home equity loan?
Once we are clear that we want to reunify debts, there are several options. The first and most recommended is to go to the lender with whom we have the greatest debt, since it should be the main interest in that we can return the borrowed money. Another option is to go to companies that offer home equity loans.
To opt for this type of credit we will have to have a property owned or with very few outstanding debts. And before making the loan, we will have to make sure that we can respond to the resulting fees, since if we don’t, we could lose the ownership of our house or apartment.