It is one of the financial solutions that has the most names: "debt reunification", "refinancing of loans or credits", "grouping of loans" ... These are one of the many ways to call a solution to reduce our payment burden.
If you are overwhelmed with your loan payments at the end of the month, a loan refinancing can be a solution to lower your monthly payment. The explanation is easy, the difficult thing is to be able to do it.
- 1 What is a debt reunification?
- 2 Debt Reunification Loans: How Much Money Can I Ask For?
- 3 Expenses of a Debt Reunification
- 4 What if I already have a mortgage on my property
- 5 Refinance debts with Credit Checker⛔
- 6 Refinance credit card debt
- 7 Banks to Reunify Debts
What is a debt reunification?
A debt reunification is an operation that consists of grouping all your loans into one . In this way we alleviate our financial burden by reducing our monthly fee.
Over a period of time, we have burdened with debt and loans and as a result we do not make the end of the month.
Usual economic situation of a person who is going to need a group of debts.
|Buy Television in Supermarket|
€ 1,319 TOTAL / MONTH
Regardless of the interest percentage that each loan has, if we value our monthly income at around € 1,800 / month, our debt effort rate is 73% (quite high).
These data show that, without counting typical expenses such as food, travel, leisure, etc., the chances that our expenses will ever exceed income are very high, with the risk of being able to enter an economic bankruptcy that is difficult to solve.
So if your mother is not Angela Merkel, neither God is going to rescue you (forgive me for being so sarcastic).
The theory to carry out debt reunifications is very simple, we get a larger loan and cancel all the previous ones. But you have to start thinking logically so as not to be misled.
If in the previous example we suppose that the total debt can be € 85,000, we are not going to request a personal loan of € 90,000 for example. A debt reunification loan is usually done through a home loan. The reason?
This in ordinary numbers would translate as follows:
|INITIAL DEBT||MONTHLY EXPENDITURE||TERM||REUNIFIED DEBT||MONTHLY EXPENDITURE||TERM|
|€ 85,000.00||€ 1,319.00||10 YEARS||€ 90,000.00||€ 395.70||18 YEARS|
* This is an example, do not take it at face value
As you can see, the grouping of loans supposes a reduction in monthly expenses, but increases the term to settle said debt.
Therefore, in summary, a debt refinance decreases, reduces the monthly payment but increases the total debt time.
What documents must be presented
Before submitting your debt reunification file to a bank, you need to know what documentation you must submit.
First of all we have to order and document all our debts, cards, loans, mortgage, etc. Generally, the financial company that performs the refinancing will ask you for the last 3 receipts of each loan .
When we have our debts well documented we must contribute our monthly income:
- Wage earners: 3 last payroll, income tax declaration, working life, and employment contract, account movements 6 months.
- Self-employed: VAT return, previous year personal income tax, working life, account movements 6 months.
- Pensioners: Personal income tax return, Annual report of Social Security income, account movements 6 months.
* For each particular case, the manager can request an additional document.
After proving our income and the bank verifies our ability to pay, we will have to provide the data of the property on which we are going to charge the debt reunification, providing your property deed and your simple note .
When we have submitted all the documents, they will be able to do a feasibility study for our operation.
Summary of documents to present
- Debt Collection
- Proof of income
- If we provide GUARANTEE of Property (Simple Note, Deeds)
Debt Reunification Loans: How Much Money Can I Ask For?
This is the question that most people ask.
In the event that we make a group of loans without a mortgage, the total amount that we can request will depend on the income that we can demonstrate. But as we have commented previously, we will only deal with the reunification of debts with mortgage loans.
In a mortgage loan pool , you can refinance debts up to 80% of the VTM (market appraised value) of the property to be mortgaged.
If a property has an appraisal of € 100,000, the amount that we could obtain with this property would be € 80,000.
Starting from the amount that we could obtain, we would have to calculate the amount that we would have to reunify, if the amount to reunify is less than the allowed amount, the operation is viable.
Expenses of a Debt Reunification
Before knowing how to value a group of debts, you have to know that this operation entails a series of expenses.
It must be borne in mind that the main procedure is a mortgage loan, which carries the typical expenses of a mortgage: notary, agency, registry, taxes, legal acts, etc. But each case is different and the mortgage may be an extension, the loans to be canceled have a cost, there may be registration charges, that is, each case may have several variables.
The usual cost of a mortgage for debt reunification can be 10% of the debt to be refinanced (I have said approximately, it may be less).
All these added costs are not required to be paid in advance, they will be incorporated into the loan pool mortgage.
What if I already have a mortgage on my property
It may be that you are interested in making a debt reunification loan and it turns out that the property on which you are going to use as collateral to group loans is already recorded with a mortgage.
Will I be able to make a debt grouping when I already have a mortgage?
The answer may seem ambiguous. It depends.
What does it depend on?
Remember the 80% mortgage charge rule? Well, it depends on that rule.
If you currently have a mortgage on a property, the amount of the same relative to its market value will determine the possibilities of refinancing.
Remember that 80% of an appraisal value must be subtracted from the current amount plus the debts that you want to group. If the sum of all of them does not exceed the famous 80% then we have reunification.
Refinance debts with Credit Checker⛔
To carry out a debt refinancing as an essential rule is not to be in the Financial Credit Institutions. Having Credit Checker is like having leprosy in the Middle Ages: no one will want you to have by their side, least of all a financial institution.
In order to reunify debts with Credit Checker, you will have no choice but to pay the Credit Checker and then request a loan to reunify debts.
If this is your case, you will have to turn to a friend / relative who will lend you the money or in the worst case, go to a private equity loan.
Having been bad boys and being registered on delinquent lists can lead us to have to suffer more costs for carrying out a debt refinancing operation.
What if I can't get help from friends and family?
Here enter the scene private investors (lenders), loans between individuals and other financial fauna that are specialists in this type of case.
All these private equity solutions require you to provide a property free of charges as collateral.
If you are in the situation to provide that property, the private equity loan will pay your Financial Credit Institutions and you will clean your file in order to access the loan to reunify debts.
The costs of a private capital operation are high , so this situation will only be recommended for high financial debt and higher than € 6,000.
God will catch you confessed if you do not find a good professional for this type of matter. What in principle was a "good idea", grouping your loans into one, can turn into a real living hell.
Therefore, in this type of case, it is advisable to be advised by a good professional in the field of private equity loans.
Refinance credit card debt
Uncontrolled use of our cards can lead to us ever having to refinance credit card debt. Credit cards are a good ally if we know how to control spending, but they can also be a big problem.
There are financial companies that allow us to refinance our credit card debts by grouping them all into one.
To be able to do this, you have to take into account that it would be convenient that you do not have delays or defaults and that of course you are not on a list of defaulters like the Financial Credit Institutions.
The method used is similar to that of a loan pool and the requested documentation is more or less the same.
Banks to Reunify Debts
When we seek to reunify our debts as a solution, the first option should be the bank with which we usually work the most.
They have our files and they know exactly our monthly income and our expenses.
But sometimes our usual bank denies us the solution to reunify our debts with a loan.
The banking business tends to be quite cyclical.
When one has the tap turned off to make loans to reunify debts, another has this solution open.
Currently there are entities that do not offer loans for reunification. If you are in this situation, you will have to contact a financial agent that is related to the entities that do carry out this type of operation.
BBVA Loans Group
We have the best financial agents specializing in the BBVA loan pool.
Bankia Loans Group
We have the best financial agents specializing in grouping Bankia loans.
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