The car loan, the mortgage, a mini-credit and a couple of cards. Suddenly we realize that we have more loans than we should and that repaying several installments of different loans unbalances our economy. If we are thinking of reuniting all our loans into one, we must bear in mind that there are different alternatives, but that each option will be more or less adequate for us according to the financial situation we are in. Below, we explain when to use each of these alternatives to choose the best alternative for us.
Expand our mortgage to unify debts
If we have a current mortgage, we can request an extension of this and thus cancel the rest of the debts and pay a single installment. The great advantage of this alternative is that mortgages have an interest that rarely exceeds 3%, so we will pay much less interest on the rest of the credits.
In order to be eligible for this alternative, we must go to the bank and it will be the bank that you decide, according to your risk analysis, whether or not to grant it to us. Generally, we will have to repay the mortgage for some years and we may be asked in return to raise the interest or provide other guarantees.
In addition, we must bear in mind that to extend the mortgage it is probable that we will have to assume the expenses of appraisal and you would also notice a commission for the novation of the contract.
Expand an existing personal loan
If we do not have a current mortgage, we can also try to reunify the credits in one of the personal loans that we have pending. Generally we will have more luck going to the loan with the largest amount that we have in force, although we can try several (provided they are loans and not credit cards).
With this alternative we can also unify all our debts into one and thus pay a single monthly payment. Just as if we extend the mortgage, it will be the bank who decides if we have a low risk profile to carry out this operation and we may have to pay some commission for the change of the loan contract.
Apply for a specific personal loan to reunify debts
As a third option we have a loan with the specific purpose of reunifying. These types of credits are more expensive than a mortgage or a consumer credit, but they allow us to reunify all our loans without problems. In this option we have two different alternatives:
Specific personal loans for reunification
These are personal loans with the specific purpose of unifying debts without a mortgage. These loans have a cost of around 12% APR and are designed to unify several loans into one.
We can request this type of financing if the debts are less than 30,000 dollars, there are no defaults and we do not include the mortgage. In addition, it will be essential to have a stable job and an income that allows us to face the reimbursement without problems.
Home Equity Loans
If we have a property owned and our debt exceeds 30,000 dollars and / or we appear in defaults files, our best alternative is to go to loans with a mortgage guarantee.
With this type of financing, it will be compulsory to have a property that we can use as a guarantee of payment to be able to contract them. Although it does not matter if we appear in defaults files.
The mortgage loan allows us to obtain up to 30% of the value of our home, with an interest from 15.71% APR and a repayment period of up to 20 years with the possibility of partial grace for the first five years.
Of course, when contracting this type of financing we must take into account that in case of non-payment we run the risk of losing the house put as a guarantee.
Whichever alternative we go to, before hiring we must make numbers and know how much we will pay each month, as well as the total and all the interest generated. In addition, it is important to be completely sure that you can repay the credit without problems to avoid falling into an over-indebtedness again.