Have you ever wondered what mortgage substitution is about, or debt transfer? Many people do not know that they can use for their financial benefit the transfer of the debt they contracted with their bank when they signed the mortgage on their homes and get a better rate.
Why would anyone want to pass their mortgage credit to another bank?
Well, there are several reasons why a person would like to sell their mortgage debt. And, many times, as the years go by since the first monthly payment of the mortgage, many things change: the policies of the banks, the situation of the country, the conditions of the mortgage market, your goals and personal priorities, among others.
In this way, the debtor of a mortgage loan can agree to sell his debt to another bank institution, without commission payments and with a monthly savings benefit. Clearly, no one would agree to pass their debt to another bank if there was no benefit involved.
There are certain expenses within a mortgage loan
some seem obvious to us, but others perhaps not so much, and it is always preferable to know well about it. Many times, we are not really aware of the expenses involved in contracting a mortgage loan and after signing the contract with the bank we realize that it implied a greater
sacrifice that we initially believed, which leads us to want to lower the monthly payment.
What immediate benefits can we obtain when requesting a mortgage substitution?
For the most part, the benefit is found in the variation of the interest rate or in the improvement of insurance contracting . When we pass the mortgage debt to another bank, what we do is improve the conditions of the interest rate, which is lower than the original. In many cases, the property is already paid in a medium or high percentage, so the risk to the bank is lower. This leads to the interest rate being reduced.
The financial institution reassesses the insurance situation
and in many cases as the mortgage payment is already advanced, the cost of the mortgage can be cut. Banks normally offer two types of insurance. Lien release insurance, used in case of death of the holder, accident or disability, and property insurance.
Getting a better rate through a restructuring of your mortgage loan from the hand of another bank can be very beneficial for the home economy, allowing you to save or invest the surplus.
In case you want to carry out this operation, you must take into account the amount of monthly payments that you have left to pay and the expenses associated with the transfer of the debt , which, although they are not high, it is not good not to deepen them.
If you’re worried about knowing if you qualify for a mortgage loan substitution, don’t worry! The requirements are usually the same as what you need to take out a mortgage loan.