Few people still use fully-fledged opportunities in Hungary, such as debt redemption and debt settlement.
However, long-term, high-interest loans can ruin our entire financial situation for years, and even pull the household into bankruptcy.
We’re reviewing our older loans
If we feel like we were clearly overwhelmed when we signed the contract to pay off the monthly installment and it is not realistic to raise the amount from month to month, look around the market for a debt settlement that suits our situation.
In Hungary, a small number of families swap loans, while in the US, 40% of new contracts are for loan redemption. Banks provide such a service for good reason: it is also more advantageous for customers to “repay” their loans rather than “settle down”.
It gives some assurance that banks will not contract with us for a installment of more than 60 percent of our income, income.
By taking out a debt settlement loan, you can combine one or more loans into one contract. Nowadays, not only mortgages, that is to say, real estate loans, but also loans on a less stable basis are accepted by financial institutions.
Typically, high-interest loans – credit card debt, personal loans
Merchandise loans – are combined into a longer-term, low-interest real estate construction. These are the most costly loans that, if not considered carefully, can become unavailable in the event of an unfavorable change, such as job loss, more serious illness, or an accident.
It is often a good idea to convert your existing mortgage loan or loans into new loans with better terms.
So it’s worth looking around from time to time for offers, as there are much better loans available today than a few years ago. Although there are costs involved in closing an earlier loan, it is still worth the switch.
We can even get extra money
Borrowing such loans and “bundling” more loans into one is not an easy process as it requires a lot of calculations: does the client get the opportunity, under what conditions, how much the installment payment will be reduced, whether this can be borne by the debtor. Initiating is definitely worth switching to a more favorable design.
A number of conditions have to be checked by the bank before the contract is concluded. For example, real estate with a minimum value of 4 million forints is usually accepted as collateral and we need to have more valuable real estate than loans.
It may be surprising that when you take out a debt settlement loan, if you have the right income and real estate coverage, you can get additional free cash to replace your existing loans.