Hard times can come for everyone, and here the main thing is to be prepared for such events. This is where Debt consolidation programs can help.
Debt consolidation – it is consolidation of several credit accounts on one for the purpose of debt repayment, usually at reduced rates.
This program helps to reduce spending on loan repayment, since after combining several unsecured debts into one collateral, the interest rate is noticeably reduced.
In other words, you receive one large amount on the security of property to pay off several debts, and then you bear obligations and pay monthly installments to only one lender for one loan.
Why debt consolidation is more profitable:
- The interest rate on mortgage loans is significantly lower than on consumer loans. Loans secured by real estate involve a longer repayment period. Therefore, the monthly payment is reduced.
- The debt is repaid only to one bank – this saves money, which, in case of several consumer loans, is directed to commission payments for the transfer.
- Lending is possible on the basis of a minimum package of documents. In most cases, only two are enough, which significantly speeds up the process of signing a deal and eliminates late payments on consumer debts that are planned to be consolidated.
- For loans secured by real estate, banks are more willing and faster to give approval for the transaction.
Almost always, the reason you should consolidate debts is so that the total amount of all your debt over the life of your loan will be less, and consolidation is often a way to lower that amount. The lower the total, the less interest you pay and the more you have in your pocket.
