MonthFebruary 2019

Debt Consolidation: Reunify credits in the mortgage, a complex decision

On many occasions the reader will have heard terms such as debt reunification or unify loans. It is a tool in the form of different financial products that, due to the growth of the over-indebtedness of Spanish families, have gained considerable validity in recent years.

There is no single model of debt reunification or unification of loans. We will see below two of the most extended modalities ; the reunification credits or the unification processes in already existing products.

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Reunification credit

As its name suggests, it is a new credit product that aims to group the user’s financing debts into a single product with a single quota. Generally, in its purest version, this type of product does not include mortgage loans, it is exclusively coverage for personal financing or consumption.

These are not particularly cheap loans, generally their potential lies in being able to combine several debts into one and give a longer repayment period, so that although the final result is more expensive than the partial debt, the monthly installments they are reduced significantly.

However, the idea has been extended that certain (new) mortgages that admit to include in the total financing the amounts destined to settle other loans of the user are also reunification credits, something that does not correspond with the reality. These cases tend to have a large final cost on the amounts financed, which, although they appear as a short-term option, are a very bad long-term choice.

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Unify debt on existing products

In spite of what the publicity can say, really before a need to unify debt the best way before going to products with external credits to financial institutions (the most common) is to try to start a negotiation with the entity where We have more volume of debt.

Regardless of the personal image we have of the entities, the truth is that they do not want to accumulate defaulters at all, and therefore, keep open the possibilities of negotiation on debts. It is evident that good deals can not be obtained in all cases, however, the possibility of refinancing debt by loans is much simpler and cheaper in this case than in the products of debt reunification. Likewise, the possibility of negotiating the mortgage loan usually translates into greater advantages than the specific products mentioned above.