How does a debt reunification work?
It facilitates the payment of multiple loans, although it involves a significant cost and is recommended in very specific cases
Debt consolidation consists in grouping all the loans and mortgages we have contracted into a single loan. In this way, we will only face the payment of a single monthly fee whose amount will be less than the sum of the different levels that we had previously faced. That is, they collect debts to significantly reduce what we pay per month, at the expense of increasing the repayment period, and therefore the final cost of the transaction due to interest.
This way of dealing with our debts can be managed by specialized companies, called mediators , that allow us to unify loans and mortgages we have with different banks or with different types of interest. The debts can also be reunited through a banking entity with which we have the majority of outstanding loans or mortgages. Let’s take a look at the reunification process, its expenses, advantages, disadvantages and requirements.
The path to the reunification of our debts is not particularly complicated, although it requires the study of our case by the mediating company. This will analyze our debts, the interest we are paying and the repayment terms that we have before, once the operation has been approved, to start negotiating with the different banking entities the new payment conditions.
When the process is underway, all our loans and mortgages will be canceled to reunify them in a single mortgage with the new conditions previously negotiated. This new mortgage will add the total of our outstanding debts and will have both a new type of interest and a new repayment period, usually longer to reduce the monthly fee that we will have to pay.
Joining our debts in one single involves a series of expenses that should be taken into account, beyond the cost of interest we mentioned above.
- As reunification implies the early cancellation of all our loans, the most common thing is that we have to pay the usual commissions for cancellation or early repayment.
- On the other hand, in order to join our debts we must formalize the opening of a new mortgage, with all the associated expenses that this entails, such as the mortgage opening commission, the appraisal costs of the home or mortgaged property, the tax on documented legal acts or the fees of the notary.
- Finally, if you decide to manage reunification through a mediating agency , this will charge your own fees; On the other hand, in case of reuniting debts through our own bank, these usually do not charge commissions for the reunification operation.