Debt consolidation: is it for me?

 

Do your debts prevent you from sleeping and undermine your morale? You do not know how to get out of it and are afraid of losing your name? Know that there are alternatives to bankruptcy to regain your peace of mind. Debt consolidation is one of them. 

The main reasons are given for the use of debt consolidation

The main reasons are given for the use of debt consolidation

There are three major reasons for debtors to opt for debt consolidation. The most common is the difficulty of closing the budget at the end of the month. Also, a reduction in income, for example during a period of unemployment or in case of illness, or irregular income can also encourage a debtor to choose debt consolidation. Finally, a lot of high-interest debt may also be a reason why an indebted person would be tempted to opt for this alternative.

Limit the spots on your credit report

Limit the spots on your credit report

In addition, these three reasons, debt consolidation can be a good way, for an undisciplined debtor who would forget to pay some debts because of the complexity to manage a lot of small monthly payments, to keep control of his finances by making only one payment per month. As a result, one limits the spots to his credit file because the forgotten ones are less frequent.

Access to a consolidation loan

Access to a consolidation loan

There are two ways to access a consolidation loan. The first is to contact a personal loan and the second is to refinance his residential mortgage. Of course, mortgage refinancing is reserved for homeowners whose mortgage debt has equity, that is to say, whose net worth is positive. Positive net worth is defined as the difference between the fair market value (FMV) and the mortgage balance when it is greater than zero dollars. Obviously, the available balance must be sufficient to pay off debts. With respect to the personal loan, you can take out the loan, regardless of whether you are a homeowner or tenant, with a financial institution, a credit company or a private lender, depending on the status of your personal loan. credit file, because it must be specified, you must have good credit to access a consolidation loan.

Various interest rates depending on the chosen lender

Needless to say, the interest rate for a conventional personal loan from a financial institution is lower than that charged by a private lender. Similarly, a mortgage refinance will be much cheaper in interest than a personal loan. It can be said, however, that debt consolidation will always be cheaper than an amalgam of small debts in terms of interest. However, one must remain vigilant if one deals with a private lender since these often require rates that are close to those required by the credit card companies. This means that the debtor will only have one monthly payment to make, but it will take much longer to settle the debts than if he were dealing with a financial institution, given the economy that he will realize on the total amount in interest by opting for a bank loan.

Practical mortgage interest information

Today more and more people are buying a house. A wise decision, because renting is no longer possible for more and more people. Due to the changed legislation regarding social rental housing, you are no longer eligible for social rental housing from a certain income. In those cases you end up with a private landlord who usually rents out properties in the same neighborhoods but may ask much higher rental prices. A tenant who pays more than 1000 euros a month for his rental home is therefore no exception.

If you buy a house of your own, your monthly payments will usually be a lot lower. This is mainly due to the fact that the government pays you back the interest that you pay for your mortgage – in part. A mortgage is a loan that you almost always need when you start buying a house. Most people don’t just have the amount to buy a new home in their bank account.

What does a mortgage entail

What does a mortgage entail

A mortgage is a special loan in which the home acts as collateral in case the homeowner can no longer meet his monthly expenses. The property is then sold to return the borrowed money to the bank. You take out a mortgage, whereby you usually pay a monthly amount in repayment of the mortgage, and an amount in interest on the outstanding mortgage amount.

There are also mortgage types where you do not pay off your mortgage every month, but only pay interest on the outstanding amount. You call this the interest-only mortgage. Until 2015, it was still permitted to take the entire mortgage as an interest-only mortgage, but since 2015, only 50 percent of the total mortgage may be interest-only.

The share of interest in your mortgage

The share of interest in your mortgage

All in all, the interest determines the amount of mortgage charges. This is because the monthly repayment is for the most part made up of interest. At the start of your mortgage, you determined how much you pay in interest with the lender. A certain percentage of interest has been chosen which must be paid during a certain period.

That interest is calculated on the basis of the state of the interest at the time of taking out a mortgage. If the interest rate is low at the time of taking out, many people will want to take out a mortgage at that time to buy a house. If the interest rate makes taking out a mortgage affordable, it makes sense that many people opt for an expensive rental house.

How does a lender calculate the interest rate?

How does a lender calculate the interest rate?

Most lenders have a good view of the development of interest over the years. They are also aware of the development of interest over the next 5, 10, 15, 20 or even 30 years. You can partly control how much you pay in interest for a mortgage. A low interest rate will keep your mortgage costs low. However, you must take into account that a low-interest mortgage lender will offer options that are for a short-term fixed-rate period. In that case, you can take out an attractive, affordable mortgage for a fixed-rate period of 5 years.

If you take out a mortgage for a longer period, the interest will be adjusted accordingly. In that case you pay more interest for your mortgage. The extent to which this is an attractive choice for you personally will become apparent over the years. The interest rate can continue to fall, which means that you will be paying too much for years, but the interest rate may also suddenly rise sharply due to all kinds of international developments, making your initially higher interest rate suddenly very attractive.

Switch to another mortgage because of the interest

Switch to another mortgage because of the interest

If the fixed-rate period for your mortgage ends, it is your right to take out another mortgage. You close your mortgage as it were. A lower interest rate; In that case, mortgage refinancing is very attractive. Bear in mind that the lender will probably opt for a short fixed-rate period of one to five years. Then you have to see again that you can refinance your mortgage for such an attractive interest rate.

You should also bear in mind that the amount of interest that you pay for your mortgage determines the tax refund that you receive from the tax authorities monthly or annually. If you opt for a lower mortgage interest, you will automatically also receive a lower tax refund, which means that your net monthly costs will increase while you pay less interest. You can also choose to use the amount that you have left at the end of each month to repay part of your mortgage extra.

A fine with your mortgage

A fine with your mortgage

If you choose to exchange mortgages at a lower interest rate in the meantime, keep in mind that the lender will not just agree to this. You commit a breach of contract if you want to refinance a mortgage in the middle of your fixed-rate period. Many lenders will then impose a fine on you. This will then largely compensate for the missed interest. You must therefore carefully consider whether it is worth changing a mortgage during a fixed-rate period.

Sometimes the lenders of your new mortgage give a compensation for the fine that you have to pay to the old lender. It is certainly worthwhile to inquire about. If you want to save money every month because of a lower interest rate, you must be able to rely on the fact that you will actually benefit, and not end up with a higher debt.

The question is to what extent a level of interest rates makes mortgage refinancing more attractive. After all, you want lower net costs. Repayment and interest refund play a role in this. If you take out a mortgage for the first time, then it is of course a nice boost when you can do this for a low monthly amount. However, keep in mind that over the years this monthly amount may just become higher due to interest rate developments.

In what cases should you refinance a debt and when not?

Knowing the details of this process is key to making the most of it, although it is not always the best option. What you have to know before requesting a refinance.

The excessive or incorrect use of credit cards or loans can generate important debts. Can’t you get the money to catch up? Did you delay with a payment and now you have an unpayable debt?

Quiet, there is a mechanism called debt refinancing that can get you out of trouble and help you sort out your financial situation. But beware! It is not always the best solution. Therefore, we tell you everything you have to consider to analyze this option and make the right decision.

What does it mean to refinance a debt?

What does it mean to refinance a debt?

You were late in paying one or more installments of a bank loan, have trouble paying your card or are using one card to pay another. These are indicators that your finances are in red.

For these cases, there is a tool called debt refinancing. Do not confuse it with the request for a loan. It is about renegotiating the conditions of your debts, grouping them into a new credit, which replaces and cancels the original with new terms and interests.

The objective is to improve the payment plan, extending debt terms and accessing installments that are easier to pay and cheaper than those initially agreed. That is, it seeks to settle the debt, reducing the interest that is currently charged for lower ones.

When should it be done?

bank

In case you cannot fulfill your financial commitments with a financial entity, the first thing you should do is determine if the expenses you are having are necessary. If indispensable, debt refinancing is a way to consider.

For starters, it is important that you know that it only makes sense if you can really save money. Starting from this base, when considering this alternative, there are two factors that you have to pay attention to, which will help you make the best decision: the interest rate and the term.

To tempt their customers, banks often offer refinancing with a lower interest rate, but at a longer term. In this way, you will achieve cheaper fees and longer terms. But this may not be entirely convenient, since as the period of time increases, your debt may grow and eventually pay more money in the long run. Therefore, we recommend that you carefully review the total cost of the new credit to analyze if it really benefits you and allows you to save, or if, on the contrary, the increase in interest hurts you and generates additional expenses.

What to do when talking with financial institutions

What to do when talking with financial institutions

You should not hide or try to go unnoticed by the banking system. Current technology makes it easy to find and quickly access your data.

To achieve a good refinancing, it is best to advise properly. Among the options available, secured loans such as those offered by Good Financial have optimal conditions for the user. By working with low interest rates and long terms, you can better face the monthly fees incurred.

As a debtor, we recommend that you be honest and reveal your situation so that the institution offers you the best alternative. She will want to make sure you intend to pay off your debt effectively.

Another point to consider is that, before granting a refinance, the banks analyze if you have previous debts, more seniority, with other financial entities, and if your payments were made in a timely manner.

What to do once a debt is refinanced?

What to do once a debt is refinanced?

Some tips not to fall into the same situation again:

  • Plan your economy. Sometimes events occur that alter our financial and personal situation, and that are beyond our control, such as loss of work and appearance of unavoidable expenses due to illness, among others. Removing these specific facts, you must keep an adequate control of your income and payments daily.
  • Do not take on new debts. Focus on canceling existing ones. Otherwise, you will enter a “deadly circle” of indebtedness.
  • Check that you are not late with any payments (including loans). And if so, we suggest you update as quickly as possible. The higher the delay, the more your credit history is impaired. This could prevent you from accessing formal credit in the future.
  • The value of your debt payments must not exceed 40% of your income. That is, if you receive monthly income of $ 100,000, your debt payments should not exceed $ 40,000.
  • Avoid your credit card consumption reach the limit of purchase available. Your average monthly consumption should not exceed 50% of the maximum authorized limit.

Invest children education

“The future of children is always today. Tomorrow will be late” – Gabriela Mistral.

Most of the economic and social problems within a country are due to low levels of education, so providing your children with the best education should be your priority from the beginning of their life.

We know that it can be very expensive

We know that it can be very expensive

However, we know that it can be very expensive, not necessarily because of the tuition, but because of transportation, uniforms, fees or supplies, which means that most of the time you miss the opportunity to study for the economic issue.

According to a study by the Good Finance bank, you would have to save 18% of your monthly salary income since your child is born to pay for high school, high school and career. So the future of your children is in your hands. Do not miss more time!

Follow these tips to make a better investment

Follow these tips to make a better investment

Plan: From the first day of your child’s life, think about the best place to study. Do you want a private school? Do you prefer the government school? Etc.

Search: According to what you want, start looking at a school with the same description that you have designed for your child’s way of being.

Be consistent

Be consistent

Do not miss a payment because it is about your child’s education. You know that tuition is a fixed monthly expense that you should always consider in your budget, and it is also one that is important to have as a priority.

To start it is important to have the money to invest, so Good Finance can help you with a loan and reach the goal easier. Most of the economic and social problems within a country are due to low levels of education, so providing your children with the best education should be your priority from the beginning of their life.

 

Non – bank loans without a register

Do not be afraid to borrow money, because you do not pay anything in advance and the interest is really very low for the country. This is demonstrated by the offer for non-bank loans without a register.

Even if you have a record in a similar register, you get a loan – of course not very bulky, but still. Do you need to borrow a paycheck or a new fridge when the old one is out? Just for these and similar cases is the mentioned loan!

Low worries, maximum benefits for everyone

Low worries, maximum benefits for everyone

New clients are welcome! Non-banking companies offer new benefits to new borrowers. Have you heard of an offer when the first loan is free? In addition, non-bank loans without Solus are 100% discreet. Who cares about borrowing money, doesn’t it? It is not at all important, and of course no one needs to know at all.

 

You do not have to do anything essential

You do not have to do anything essential

There is no need for a long phone call to ask why you want to borrow. Today is completely different. The use of the Internet is almost at its maximum – and this also applies to the world of classic non-bank loans. Or whoever does not lend online, as if it is not even on the market at all, it will be quite the same.

Selection of non-bank loans

Selection of non-bank loans

The wide choice, however, entails the need to choose from several different dozen offers, which is a stumbling block for some. Which loan is actually the one? Fortunately, not every non-bank company provides non-bank loans without a register and Solus, as there are relatively few such loans.

Therefore, the selection is narrated and you will be able to choose from several offers. In this case, the decision making will be a bit easier. However, the competition forces all participants to reduce their interest rates here too, so there will be no shortage of bargains – just choose what you find interesting at the moment.

Loans-In the Interest-Free Period You Borrow for Free.

With your credit card, you can go shopping and don’t settle your account balance. “Credit cards” work similarly to loans – when you pay from a lender up to the limit set.

 

However, they have two advantages over conventional loans:

  • Discounts and benefits: If you pay with a credit card in selected stores, you can save significantly. For example, with our Premia card, you collect premium CZK for purchases from partners. Once you collect 100, we’ll send you a $ 100 purchase voucher.
  • Interest-free period: this term refers to the period during which you can pay your obligations and do not pay a crown for lending money.

 

The most important term is the twentieth

loan

The length of the interest-free period is determined by the credit card providers themselves, so it varies piece by piece. While some credit cards do not have it at all, others can draw free money for up to two months. But it has a catch – the length of the interest-free period is different every time. For a Premia card it can take 21, but also 51 days. The repayment term is always on the 20th day of the following month, but it depends on when you shopped.

In the picture you can see what the interest-free period is like. But let’s explain this further on the example of Mrs. Lenka, who bought a June trip to the sea in May.

 

In May you shop, in June you pay

payment

Lenka knows that the best date for credit card purchases is the first day of the new month. It can repay them only on the 20th day of the following month and will use the interest-free period in its maximum possible duration.

  • On May 1, her Premia card paid a trip to the sea and circled the date of June 20.
  • She must settle her accounts no later than this day, otherwise she will be charged interest for each day she had the money borrowed.
  • She did not pay for the rest of the month with the credit card; This account is due on 20 June.
  • On June 10, Lenka found an account statement in her mailbox and paid it immediately.
  • On the 13th he will check if the money for shopping has arrived on our behalf and the 15th will be sitting on the plane looking forward to the beach.
  • Thanks to her good payment discipline, Lenka had free money all the time.

Online banking at Good Bank

Online banking at Good Bank has not gone smoothly because the past few years have been turbulent years for companies and institutions in the financial sector. Banks have experienced this personally and have often been the subject of discussion and discussion. Good Bank is a bank that has had a hard time. But Good Bank is a bank that has shown resilience and perhaps has come back stronger than it ever was. The bank has taken a step forward and has become a modern bank that puts the customer’s interests first.

Online is the future

Cash

As is the case with so many other things, online banking is also the future. Online banking at Good Bank is therefore well arranged and arranged. Customers can easily log in via a laptop or computer using a so-called e.dentifier. If you do not have this, it is also possible to gain access to your banking through a login code. You also need this login code if you want to manage your banking via the Good Bank app that you can download for your mobile phone or tablet.

Online banking with Good Bank

Online banking with Good Bank

Online banking at Good Bank is not only limited to computer banking. The big advantage of banking via mobile phone is that you can actually do this anytime and anywhere. After all, the only thing you need is a connection to the internet. The use of the mobile banking app is definitely recommended when you go on vacation. On vacation you do not always have access to a PC and then the app offers a solution.

 

What can you arrange via online banking at Good Bank?

What can you arrange via online banking at Good Bank?

Basically, online banking was primarily meant for checking your account balance and being able to make transfers. It is clear that these are still the most used functions these days. But nowadays, much more is possible if you use online banking at Good Bank. You can arrange the following for yourself:
* Re-application of your debit card or pin code (also from credit card)
* Have an automatically collected amount reversed that you believe the debit is not justified.
* Manage periodic payments
* Manage and take out insurance
* Adjust the standard limit of your bank card for payment or cash machine (temporary increases)
* Opening payment or savings accounts

 

Not completely

Money

This is a list that is not complete. Hereby you have to know that at this moment a number of things can be arranged online via the PC, but not yet via the app. People are working hard to make as many services as possible available via the app. This is therefore at most a matter of time. You see that online banking at Good Bank offers you a large number of benefits. It is up to you to determine whether this online banking actually suits you.

 

Have the mortgage loans changed since 2008?

How big is a development in our lending habits?

In recent years, we have heard a lot about interest rate developments, and what it means – but how much has it really changed ‘ lending habits? The total amount of the F5 loan has almost tripled in the last 10 years, whereas the fixed-rate loan is heading in the opposite direction. F1 borrowers even get money back , as their interest rates have gone down.

Here at Wealthy Loan we have taken a look at the development of the mortgage loan from 2008 to 2018. But first we look at the individual loan types. As you may already know, when you buy a home, you can borrow up to 80% of the value of the mortgage. This means you may need to fund the rest of your home with a home loan.

The mortgage loan can be taken either as a fixed-rate loan or a variable-rate loan, also called a flexible loan (F-loan). Both types of mortgages are interesting to investigate as our lending habits have changed significantly over the last ten years.

With Wealthy Loan you can compare the prices of loans, so you can get the best collection loan, car loan or consumer loan. All you have to do is fill out one application and you will receive up to several offers – totally free and no obligation!

Mortgage loan development from 2008 to 2018

money coins

The are flowing to the mortgage banks and we are borrowing money like never before. In 2018, we have borrowed DKK 2,700 billion. DKK – this is a total of DKK 600 billion. more than we did in 2008 . But the development has not been monotonous. Flexible loans only become more popular as time goes on.

Diagram of Wealthy Loan

Since 2008, the loans have changed from the fact that almost half of our money was as fixed-rate loans. Now it is almost only a third. Although we still lend almost as much money in fixed-rate loans, the percentage of total lending has fallen.

The need for a variable rate mortgage has increased. We have been particularly pleased with F2 to F5 loans compared to previous ones. These loans have increased in cash by 276% since 2008 , which means that just over a quarter of our loans are now F2 to F5 loans.

It has meant that the F1 loans have fallen in percentage terms instead. If we take a look at the amounts, we see that more money is still being lent out. Lending increased by 7%. That doesn’t sound like much, but in reality it means an increase of $ 66 billion. since 2008 .

The reason for this significant change in our lending habits can be found, among other things, in interest rate developments. Since 2008, we have seen a decline in all loan rates. Even the bond yield for a fixed-rate loan has fallen and still does. As interest rates have fallen to the lowest level ever , we have started to borrow more money.

The interest rate trend has shown that in Denmark we are moving more into low interest rates than a safe and higher interest rate.

The interest rate trend has shown that in Denmark we are moving more into low interest rates than a safe and higher interest rate.

The higher interest rate on a fixed-rate loan does not attract us as much as before. The reason is that if interest rates fall, or are as low as now, a flexible loan will almost always be the cheapest. Other costs and fees can always raise the price, but the repayment will be cheaper in a flexible loan.

The F1 loan has had the greatest interest rate trend since 2008 . Over the years, interest rates have fallen below 0%. The reason for the increase in F1 loans must therefore be found in the fall in interest rates. In fact, if you choose an F1 loan now, you will get money back . If you choose an F1 loan, on the other hand, you are dependent on renegotiating the loan again next year, and interest rates may have increased here.

Interest rates have had the greatest impact on F2 to F5 loans. We have only selected the F5 rate here, but the F2 to F4 rates are almost the same. The F5 interest rate has fallen so significantly that the today take this loan if they know that their income will continue unchanged for the next five years. It is therefore reasonably attractive to be able to renegotiate if the income should have changed, even if the interest rate should have done so.

On certain variable-rate loans, you can add interest rate ceilings should interest rates rise.

On certain variable-rate loans, you can add interest rate ceilings should interest rates rise.

This means that if interest rates fall, the interest rate ceiling does not matter and can therefore be more of an expense than a hedge. The addition of the interest rate ceiling to the flexible loans has therefore seen a decrease due to the fall in interest rates:

  • 73% reduction in variable rate loans with interest ceiling from 2008 to 2018. From DKK 319bn in 2008 to DKK 86 billion DKK in 2018
  • 99.9% decline in variable-rate loans with affected interest rate ceiling from 2008 to 2018. From DKK 214bn in 2008 to DKK 0.16 billion DKK in 2018

In order to illustrate the development of the mortgage and interest rates, all values ​​have been selected from the sources below. Based on this, we have calculated the total percentage increase as mentioned earlier.

criterion Description Source
Mortgage loan development Denmark’s total lending in each loan type is collected through Finans Danmark, which publishes lending statistics every quarter. Find Loan
Bond yields Through Finans Danmark, the historical bond rate for fixed-rate loans has been collected. The interest rate history dates back to 1997 at Finans Danmark. Find Loan
Flex-loan Interest Realkredit Danmark has a history of the cash loan interest rate for Flexlån back to 1997. The interest rate on which this study is based is paid in DKK. Drestigartos Loan

 

If you find it difficult to find a head and tail in the mortgage world, you can read more about home loans here at Wealthy Loan. We also offer free and non-binding offers from our own partners. If you send us your needs, we can adapt a home loan to exactly your current situation.