If you want to pay all your debts and keep one, you have a good option: offer your home as a mortgage guarantee to obtain a free availability loan . We tell you below what are home equity loans.
When can we benefit from a home equity loan?
Surely you know someone who has many debts. I don’t know if as many as Maria Soria. She had acquired many products and services and paid them in monthly installments or with credit cards. He owed the car, the giant television, the dental treatment, a trip he will make at the end of the year, his little son’s party, the license plates and a lot of cravings for clothes and accessories. I knew that this was the way to get things done: borrowing. Each time she received her salary, Maria Soria distributed the money in envelopes marked with each debt. It is not always enough to cover all commitments.
Recently she told me that she was happy with what she has accomplished with her work. And, also, that I was tired of the envelopes. Above all, because, of his salary, he really had very little left.
I asked him to study his case. I assumed that Maria Helena should be paying a good sum of money in interest and could find a better alternative for her.
Maria Soria sent me the extracts of the cards, the schedules of the debts of the car and the dentist and the relationship of the other debts with the financing detail.
Indeed. She was paying high interest. The television, for example, bought it in a promotion. Since he did not have cash at that time, he authorized deferring the purchase to 24 months. With the interests of that purchase, another larger television would have been bought.
I made the account of the money I was paying in interest and called it.
“I have good news,” I told him. If you took a free-use loan with a bank and paid all your debts with that money, you would have cash again.
-Seriously? How much?
—At least five thousand pesos.
I felt like I was going to pass out.
– It could be more if the credit was backed by a mortgage on your home.
About home equity loans
I explained that some banks handle a loan called a “home equity loan.” The money can be used in whatever you want : travel, studies, investments, cars or debt payments. The important thing is that, for offering a real estate as a guarantee, the rate is very interesting. Therefore, it was a better business for Maria Soria to acquire a loan to pay off all debts, mortgaging her house.
This product has many names in the market : personal loan with mortgage guarantee, freely available credit with mortgage guarantee, credit with mortgage guarantee. As you can see, it is different from the credit we know to buy a property (in that case the money is requested for the purchase of the house). Also, in each entity you will find differences in the design of the products: some offer terms of up to five years, others up to 15 years. Some lend up to US $ 100,000, others, up to US $ 600,000.
There is a perfect plan for your customer profile
The important thing in this business is that the value of the property does support the value of the credit. And, something very important, that the house is in your name, that is, debtor and owner must be the same person. The property must have a factory declaration, be independent and notarized before the Public Property Registry – this requirement is very similar to when a mortgage credit transfer is requested. The bank will demand a first degree mortgage in your favor.
The application is accompanied with information on income and documents of the house, among others. The bank will make these evaluations:
- Study of the viability of credit: your ability to pay according to income.
- Study of titles: Check that the asset can be mortgaged (it has no other mortgages or lawsuits or other restrictions and taxes are up to date);
- Appraisal: It will hire the services of a specialist to determine the commercial value of the property.
When your loan is approved, you will be asked for insurance:
- All risk insurance: if something happens to the house, the insurance responds.
Maria Soria’s business was approved (with some difficulty, but we succeeded). Yesterday he asked me for advice for his coworkers on the management of credit purchases. It is certain that several could benefit from a home equity loan.