We all have several expenses to face. Raise your hand who does not have to face some of the following expenses monthly: rent, mortgage, electricity, gas, water, letters of the car or any other vehicle, etc. These expenses add up to a significant amount of money, and in many cases they are nothing more than loans, even if they are called differently. For example, the letter of the car or the mortgage are loans granted by certain financial entities, to buy a vehicle or a house. Well, the reunification of debt consists of uniting the loans that we have with several entities in one , so that the interest quotas decrease significantly, producing an important saving with this option.
Advantages and disadvantages of a debt reunification
Let’s give a practical example. Imagine that today you have a debt with the bank of 93,500 euros among all expenses, and you will pay a monthly fee of 934 euros. In order to reunify your debt and reduce the monthly fee, you must meet a series of expenses:
The commission for the cancellation of the mortgage, which, although it depends on the entity, is usually 0.5% for the first five years, and 0.25% thereafter. With the data provided above, this would mean about 160 euros.
- Notary fees, agency, property registration, etc. at this point about 740 euros go.
- Commission of the financial intermediary, which performs the operation. It is usually 3%, that is, about 3,000 euros.
- Opening commission for the new mortgage, which is around 2%, that is, another 2,000 euros.
- Commission, this time for the opening, notary, agency, appraisal, etc. 1,000 euros
- The Tax on Documented Legal Acts (IAJD) would be about 1,000 euros.
With all these accounts, in the end, the operation has cost around 8,000 euros. If we add to this the debt we had of 93,500 euros, in the end, we will increase it to more than 100,000 euros. What will have been achieved with this reunification is a repayment term of the mortgage of 35 years and an interest of 4%. This has its positive and negative parts. On the one hand, the debt will have increased and will be paid for longer. But, on the other hand, we will have a monthly fee reduced by half, around 449 euros, so we will have more liquidity and life month by month will be easier.
As we always recommend in The Borrowers, financial issues must be clear, and always set budgets for our expenses based on income. To sign a debt reunification, we must first ensure that capital can be amortized, so that at the end of the term we have liquidity of the debt.
Requirements and documentation for debt reunification
People who are interested in making a debt reunification must meet an essential requirement: that one of the expenses is a mortgage. Therefore, those who live on rent will not be able to perform this operation. To request it, a series of documentation is required: the DNI, the deeds of the property, the employment contract, the payroll, the last declaration of the rent, appraisal of the house, last receipts of the credits that are had and, in case of embargoes, letters from lawyers or court records. This means that a debt reunification is open to customers with default issues or included in delinquent lists.
In any case, and to perform the initial calculation of expenses, it is very useful to support you in the application of The Borrowers. Here you will find a breakdown of what you invest in each game, as well as the cost of financing you have to pay for the house, the car or any other expenses under loans. From here, you can make decisions about the reunification of debt with more foundation, since you will be based on real data that will help you measure whether or not your economy compensates the operation.