You must have heard that you can replace your existing expensive loans with cheaper ones with a redemption. But when to buy a loan? For example, if you have several smaller, more expensive loans, you may want to replace it with a cheaper one, or switch to floating rate loans now for fixed rate loans. It is important to be aware of the essence of a loan change so that a good financial decision cannot be hindered by lack of knowledge. Buying a loan can save you hundreds of thousands and even millions of forints.
Redemption of unsecured loans
You should get rid of your overdraft and credit card debt as soon as possible. Putting off your debt every month and paying off a fraction of your loan will accrue more debt. Even the monthly interest charged on your outstanding debt and any default charges may not be enough to pay for them on a monthly basis. The only solution to this problem can only be to take out a payday loan.
A payday loan is a much cheaper solution than an overdraft and a non-repayable credit card. After you replace it with a payday loan, you simply run out of debt. Not only do you have to pay off less each month, you can also pay off your debt completely by choosing the right term.
You may also want to replace your existing payday loan if you want to increase or decrease your maturity, change your installment, or simply lower your APR.
Credit line debt (overdraft, credit card) is settled by the bank based on the total amount of the credit line, regardless of how much the credit line is used up.
In all cases, proof of the exact debt must be requested. You need to decide whether you want to apply for additional funds that you can use in addition to the loans you want to replace. If you have more than one type of loan, and you also want a freely available portion, then credit institutions tend to replace the loans first, and if the KHR appears to have paid off and foreclosed, you can usually get the freely available amount.
Redeeming mortgaged loans
The main reasons for replacing home loans and freelance mortgages are:
- reduction of maturity
- reduction of borrowing costs
- increase the maturity due to the need for a smaller installment
If you find it difficult to pay your monthly installment, there are two ways to reduce it. One solution is to reduce the cost of credit, the other solution is to reduce the cost of credit, just by increasing the maturity. The problem with the latter is that you have to pay interest for a longer period by increasing the maturity, so it is better if you do not reduce the installment by extending the maturity but by cutting costs.
Even if you do not have a problem with the monthly repayment of the loan, it is worthwhile to replace the mortgage loans. For example, if interest rates are expected to rise in the future, it is worth replacing the loan so that, over the years, the interest rate of your loan, and with it the repayment, will not increase. Therefore, it is worth replacing your existing loan with a longer term interest rate, preferably with a fixed interest rate until the end of the term. This change will make the repayment of the loan taken more predictable, because it will not increase.
There are also costs involved in replacing a home loan (eg notary fees). Therefore, it does not matter how long your loan remains. If you have only a few years left, it may not be worth the loan. The more time you have on your home loan, the more likely you are to gain a lot from the loan redemptio