Refinancing with mortgage security often means combining your existing unsecured loans into a new mortgage. This gives you a lower interest rate and a longer payment period. In other words, the unsecured loan will cost you less, and in addition, the monthly costs will be lower because they will not be repaid as quickly.
For some, this is the solution to avoid debt collection and payment defaults.
If you own a home and have unsecured debt that you are struggling to pay, refinancing with collateral in your home may be the solution for you. Many of our customers already have debt collection, one or more payment remarks, complicated finances or have been refused refinancing by their regular bank. This is not an obstacle for us.
If you do not own a home, a real bailee may be the solution. In this case, someone else, usually a family member, must pledge their home as security for your loan. We then take a mortgage on your guarantor's home, but you pay the interest and repayments.
It's important to remember that we can't remove some of your debt, but we can make it more manageable. We do this by baking your debt into a new mortgage, extending the payment period of your original debt, which is paid off over 25 years. This, together with an often lower interest rate, means that your monthly costs are lower
Our goal is for you to be able to move your loan back to a "regular" bank with a lower mortgage rate once you have regained control of your finances. It varies how long this will take. Some people are with us for two weeks, while others stay with us for a few years. Dhe most important thing is to clear up debt collection and payment remarks, and it may also be worthwhile to show a new bank that you have managed to maintain control over time.
You are therefore not meant to have a mortgage with an interest rate of around 8% forever, but for a period of time so that you can keep up with your bills. Once you have gained control of your finances, you are free to apply for financing from a new bank.
The application process doesn't take long, but you may want to have some numbers checked.
First of all, we ask for personal data about you and about your co-borrower, if any. Furthermore, we need information about your income which includes:
The last step is to provide information on loans and debts. Here it is best if you can provide as much information as possible. All debts are relevant, for example:
If you are not sure whether you have included all your debts, we recommend that you check the debt register.
Finally, we also ask you for a power of attorney so that we can easily obtain more information about you and your situation if we need it. You sign this authorisation with BankID.
In order to refinance loans that have already defaulted, we rely on some form of collateral. Collateral in housing allows us to offer a lower interest rate than is usual for credit cards and consumer loans. The interest rate is not as low as you get in a regular bank, but it is significantly lower than what our customers often have before. This leads to lower costs per month, which can make everyday life easier for many people.
This is why we say that if you can put up your own or someone else's home as collateral, we may be able to help you out of your financial difficulties.
Read more about why the bank needs to have security on your home here.
A consumer loan is an unsecured debt, often with a high interest rate, that can be used to cover unforeseen major expenses. Because of the high interest rate, it pays to pay it off quickly if you can.
Mortgage refinancing is used to gather all your debts in one place to get better terms than you have today. As the bank takes security in the home, the loan is considered secured, and therefore we are able to offer lower interest rates than what you get on consumer loans and credit cards.
Read more about unsecured and secured debt here
Credit cards are a form of unsecured debt and usually carry an interest rate of around 20%. On your credit card bill, you can also choose to pay only a minimum amount per month, instead of paying the whole bill. This can cause the debt you have taken on to increase faster than you can pay it off.
With home refinancing, you get a lower interest rate and a longer term on your mortgage, which means you still pay off your mortgage every month.
It is important to remember that although the interest rate on the mortgage you get with us is higher than with your "normal" bank, it is significantly lower than the interest rate you get on your credit card. If you have many credit cards that are highly leveraged, mortgage refinancing may therefore be a possible solution for you.
Consumer loans are also a form of unsecured debt, but usually have a lower interest rate than credit cards. Such loans are usually repayable within a short period of time, usually a few years, and therefore become a major additional expense for quite some time that can make your finances unmanageable.
If you have taken out several consumer loans, refinancing with collateral may be a solution
This article is part of the category Economic first aid , a collection of articles that deal with topics related to a strained economic situation, such as reminders and collection, payment notices, garnishments and forced sales. Read more about Financial first aid
