Have you wondered how it works when people refinance homes to do debt consolidation.
Refinancing your home loan to consolidate your debt is not a new thing, but people have only recently started realizing the benefits and that's why it has now become a popular thing to do.
How does it work?
Well firstly you need to have equity in your property, that means that your property must be worth more than you currently owe. That difference should also not be more than 80% Loan to value (LTV) which means, if the property is worth R1 000 000 and you owe R900 000 the LTV is 90%, then you can't apply.
The banks have put a restriction on the amount you are allowed to owe in relation to the value of the property. That amount differs from bank to bank, but is generally between 80-90%.
I have enough equity, does it guarantee my refinance home loan?
No, unfortunately not. You also have to qualify on your income and affordability. Generally you are allowed to use 30% of your joint gross monthly income for a bond repayment, but after your salary deductions and monthly expenses are deducted you must still be able to afford the bond repayment.
Isn't it expensive to use your home loan to refinance?
It is expensive if you use the bond to pay off your car or credit cards and just continue to pay the minimum bond installment over the term of the bond which is normally 20-30 years. I suggest that you use the monthly saving on the debts you've paid off to pay an additional amount into your bond. Not only will you save on interest, but you will pay your bond off much sooner and not pay back your debts over 20 years.
I hope that this short article helps you to understand why people refinance homes for debt consolidation and how it can benefit you.
To find out more about how refinance homes loans can help you, go to www.debtconsolidation-loan.co.za
Sunday, May 24, 2009
Friday, May 22, 2009
Consolidate Accounts – Save Thousands
The latest buzz word is “debt consolidation”. What does this mean? Does it really help? What are the benefits to consolidate accounts into one larger account?
Benefit 1
When you have several accounts to pay every month, you have just as many due dates and different amounts to keep track of. This makes it more difficult to plan your budget. Since you don’t pay everything the same date, you will have money in your account that you can’t use, since they must be used to be back debt. This means you have money in your account that is not actually yours.
After you have consolidated your accounts in to one account, you only have to worry about one due date, one minimum payment, and what is left in your account is yours to spend as you please.
Benefit 2
With multiple payments come multiple bank charges. Save on bank charges by only having one account to pay at the end of the month.
Benefit 3
With only one monthly payment, it will be easier for you to draw up a comprehensive budget. With more control, you will be able to control your finances better, and it will be easier for you to pay off your debt quicker.
Benefit 4
When consolidating unsecured debt into a secured loan (mortgage) you will benefit from more beneficial interest rates. This means lower monthly repayments. The result will be a better cash flow. If handled correctly, you can use your additional cash to invest into your mortgage, shorten the term with a couple of years, and save thousands.
If you are a home owner, and want to apply for a debt consolidation loan you will have to fill out a short application form. You will then receive a FREE quote from well established, nationally recognized lenders. You do not need to decide now whether the debt consolidation loan is for you.
Just apply and compare the repayments to your current situation. There is no obligation on your part. If you decide that it is not for you, you simply do not have to accept the offer. You have nothing to lose and everything to gain. Go to: www.debtconsolidation-loan.co.za
Benefit 1
When you have several accounts to pay every month, you have just as many due dates and different amounts to keep track of. This makes it more difficult to plan your budget. Since you don’t pay everything the same date, you will have money in your account that you can’t use, since they must be used to be back debt. This means you have money in your account that is not actually yours.
After you have consolidated your accounts in to one account, you only have to worry about one due date, one minimum payment, and what is left in your account is yours to spend as you please.
Benefit 2
With multiple payments come multiple bank charges. Save on bank charges by only having one account to pay at the end of the month.
Benefit 3
With only one monthly payment, it will be easier for you to draw up a comprehensive budget. With more control, you will be able to control your finances better, and it will be easier for you to pay off your debt quicker.
Benefit 4
When consolidating unsecured debt into a secured loan (mortgage) you will benefit from more beneficial interest rates. This means lower monthly repayments. The result will be a better cash flow. If handled correctly, you can use your additional cash to invest into your mortgage, shorten the term with a couple of years, and save thousands.
If you are a home owner, and want to apply for a debt consolidation loan you will have to fill out a short application form. You will then receive a FREE quote from well established, nationally recognized lenders. You do not need to decide now whether the debt consolidation loan is for you.
Just apply and compare the repayments to your current situation. There is no obligation on your part. If you decide that it is not for you, you simply do not have to accept the offer. You have nothing to lose and everything to gain. Go to: www.debtconsolidation-loan.co.za
Tuesday, May 19, 2009
Debt Consolidators – What Can They Offer?
When finding themselves in a situation where it is difficult to service all financial commitments, many will turn to a debt consolidator for assistance.
A debt consolidation consultant will help you consolidate all your existing debt into one account. There are many benefits to this, including having only one monthly payment, instead of several. This will give you more control over your finances, and easier to pay off sooner.
Many debt consolidation consultants will use a client’s mortgage as the main tool to consolidate debt. Since a mortgage is the “cheapest” kind of debt available, it is the recommended method. It provides a longer repayment term, and a lower interest rate, as it is a secured loan. This means it will be easier for the client to meet the minimum payments.
Some debt consolidation consultants will make use of unsecured loans to assist with consolidation. Even though these are more expensive than a home loan, they could offer the relief a non-home owner is looking for.
When choosing a debt consolidator it is important to remember that they are performing a service that is in place to help you to get into a better financial situation. You need to be comfortable with what they are offering you, and be sure that you will be in a better financial situation after the consolidation.
Some debt administrators will wrongly call themselves debt consolidation consultants. Since debt administration includes legal costs, debt collection costs, and debt collector’s fees as well as a different procedure, this is very misleading. As the client, you need to make sure what service it is you are asking for.
If you are a home owner, and want to apply for a debt consolidation loan you will have to fill out a short application form. You will then receive a FREE quote from well established, nationally recognized lenders. You do not need to decide now whether the debt consolidation loan is for you.
Just apply and compare the repayments to your current situation. There is no obligation on your part. If you decide that it is not for you, you simply do not have to accept the offer. You have nothing to lose and everything to gain.
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