Debt consolidation financing is available in two ways: as a loan or as a mortgage.
The criteria and methods are the same as those followed for the stipulation of personal loans. However, there are limits to the maximum duration of the loan (10 years) and the maximum amount that, with some institutions, can reach 60,000 USD. Moreover, this type of loan presents greater uncertainty and risk for the bank or the financial company. So the interest rates will be higher than those applied for other purposes, such as buying a car or renovating the house. As for the convenience of taking out a loan rather than a mortgage, we can indicatively state that the loan is preferable up to the threshold of 60,000 USD. Above this figure the mortgage is more competitive.
This is a real mortgage, paid to extinguish other loans, among which there could also be one or more mortgages. The advantage of using the consolidation loan is that you can use the duration (up to 30 years – and with the loan not possible) and the amount (above 60,000 USD – and therefore is the only solution when between the loans to be consolidated include mortgages with a high residual amount).
Furthermore, as the mortgage guarantee is present, the interest rates will be lower than those of a loan. To specify that the loan technically has a greater cost of the loan, due to the obligatory insurance on the building, administrative and notary costs, the registration of the mortgage on the building. The method of the loan is therefore advisable when the amount of the loan exceeds a certain consistency, since the expenses would have a great impact on the total cost of the operation and would not make it convenient. We remind you that the applicant must own a property on which to register the mortgage. By consolidating an old mortgage on the same building, the old mortgage will be canceled in favor of the new one.
An additional opportunity that can offer loans and consolidation mortgages is to obtain additional liquidity than is necessary to pay off the remaining loans and the associated costs, always within the limits of the financing established by the bank or the financial company.
The procedure for the practice is quite rapid. The debtor must present to the financing institution the documentation that certifies the various loans in progress that he intends to consolidate. The Institute, after verifying the solvency of the customer, provides for the extinction of the old loans, including the payment of any penalties and fees, and the payment of the new one.