Refinansiering Av Gjeld: Should You Do It?

An individual’s house often serves as a security and bedrock in their lives. This is considered a refuge and a place where they can feel the safest. With this said, as you continue paying for your mortgage, you can always accrue more value and take out a loan in the process.

After years of paying a significant chunk of your mortgage, you can take out a larger one in return, and this is going to help you handle your loans in a more manageable way. It’s a process that can simply lower your interest rates, help you consolidate multiple loans, and get a lower due each month.

However, know that not all people are qualified to get them. This is why you need to work with a qualified financier who can offer you something more reasonable. It does not have to be the current bank or lending institution where you originally took out the home loan, but it can be a new financier altogether. Browse your options on sites like and see what they have in store for you. Know that many of these offers are limited time only, and others are willing to work with borrowers who have a lower credit score so don’t miss out on them.

Restructuring and Refinancing Differences

As you’re looking to get those extra funds, you might begin to wonder whether a restructuring or a refinancing is right for you. Some people often consider them as the same, but there are differences that you need to know about.

When you’re in the market to consolidate multiple debts or get a better deal, there are always options like reorganization. This is often done by larger corporations who may lay off employees to strengthen their overall financial outlook. Oftentimes, some individuals can get a new contract with a better rate and term than the previous one. They are going to pay off their old debts and get a new one.

Altering the current contract instead of drafting a new one with new numbers and figures can be simpler. It’s going to undergo the typical changes in the principal payment, due date, and modifying how frequently the borrower should pay for their liabilities.

The restructuring process is only available in a specialized circumstance where there’s an assessment that deems the individual to be financially unstable and they can no longer meet their monthly obligations. Know that this is a process that can have an extremely negative impact on one’s credit score and record, so this is often a last-ditch effort and strategy that’s done by a few people.

Borrowers are going to negotiate with their financiers and if there are major changes that happen, then it’s important for the people involved to begin their talks with their financiers to see what their options are. Of course, banks and other financial institutions don’t want a default to happen because bankruptcy is very expensive. However, most of the time, these institutions usually don’t have a choice but to negotiate, especially if the individual is way underwater. This is going to mean waiving some of the late fees and increasing the amount of coupon payments as long as they can get something.

Refinancing and What to Know About It


With this process, the individual often applies for a new debt instrument that has a better contract deal than what they previously had. This is going to be cheaper on the loan as a whole, or it can make their monthly dues more manageable.

It’s a process that’s more common than the aforementioned restructuring because many people can qualify for it, and the process is quicker. Timely payments can even increase one’s credit rating, and the one-time payments are going to reflect on the history of the borrower. The original loan is also considered to be already paid off, and this is going to garner trust.

Common reasons why so many people undergo this process are to decrease their interest rates, consolidate multiple obligations each month, change the entire structure of the loan, or get some cash to pay their utilities, car, groceries, and phone bills. Securing a more favorable contract is the goal here and to be able to achieve this, it’s important to talk to the right company for a better term.

Usually, you should only do this when there’s a change in the interest rate, and this is going to influence the newly created contracts. For instance, if the governments begin to slash the market rates because the economy is in good condition, then this is something that you should take advantage of while it’s still available.

You can pay less overtime, and this is definitely for the same loan with nominal rates. Borrowers need to do the refinance process before the maturity date because there are call provisions that many loans follow. One example is paying extra fees and penalties when paying early, and as the one initiating these transactions, you need to do your research and due diligence when calculating the net value of the previous and current loan.

An Example to Know About

As a homeowner, you currently have a million dollars left on your mortgage, and it’s payable for 20 years with an interest rate of 10%. In this situation, there’s a more likely chance of you paying around $9650 and receiving a notification from the financial institution that you can get a 7% rate. In this case, you can lower the mortgage to $7753, and this is going to save you around $1900 each month, which can be used to pay other needs.

Disadvantages and Limitations


Know that the above example is oversimplified, and even if the result is very attractive, the figures are going to vary depending on the borrower. There are transaction and closing fees that are often associated with the refinancing.

Although many companies and individuals can secure a better term, you also need to add the closing, transaction fees, and penalty payments if applicable. Brokerage costs should also be a factor, but if you can save almost half a million dollars through refinancing, then it’s in your best interest to proceed with it.

Credit Card Refinancing and Consolidation

Although the primary topic is the mortgage, you can also get a credit card refinancing that can also help you get a lower interest. It involves transferring most of your high-interest balances into a 0% APR card.

This is going to make your score negative in the short term, but it’s going to significantly improve when you’re able to make on-time payments. It’s going to lower your score by a few points when you apply, and your age is a factor too.

Hard inquiry on your credit report is going to do this, but you can shop around for a period of 14 to 45 days, so the bureaus are going to consider this as a single inquiry. However, the ones that are spread out are going to make a bigger impact, so decide and be quick with it if you want. Regardless of your options, you need to avoid late payments or accumulating debts that can hurt your score. Talk to a qualified financier if needed to see if you should do this step or not.

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