Refinancing and Debt Consolidation
Refinancing
Refinancing refers to the replacement of an existing loan with another loan, usually to take advantage of additional benefits and incentives offered by other lenders. Refinancing is carried out for various reasons:
- To take advantage of a better interest rate resulting in either a reduced monthly payment or a shorter loan term.
- To consolidate other debts (credit card debts) into one loan resulting in a longer loan period but with one repayment amount
- To reduce the monthly repayment amount if finances are tight due to unexpected expenses (birth, college etc)
- To reduce or alter risk (e.g. changing from a variable-rate to a fixed-rate loan)
- To access the equity of a property to obtain an equity loan to finance renovations, property investment etc.
Refinancing takes time and costs money as they are charges for early settlement of loan, application, handling fees, mortgage fees, valuation fees etc. Refinancing is required if you face financial difficulties and this cost can be offset by the fact that it makes debts more manageable and with a lower interest rate the savings can be substantial.
Refinancing also is advisable for investors who need the new equity loan to purchase rental property and the income gained will offset the costs of refinancing. Speak to Golden Touch consultant today to research all the options available and to select the most profitable product for you.
Debt Consolidation
If you find yourself in debt unable to meet the repayments on your loans without equity to refinance then you can opt for a debt consolidation loan. This loan simply put is the replacement of multiple loans and debts, such as credit cards and unsecured personal loans, with a single personal loan. The length of the loan which will be for a longer duration with a lower interest rate can be set for a repayment amount which meets your needs.
A Golden Touch consultant will negotiate with your creditors to eliminate or reduce charges like late charges, penalties and other additional fees etc. We will then help you find a loan that will pay off all your creditors and leave you with a single loan with an easy repayment option and low interest fee. This will help you get back in control of your finances and it will not destroy your credit score.
Benefits:
- Reduced Monthly repayments suited to your need
- Lower interest rate saving you money in the long run
- Only one creditor and one monthly repayment amount
- Lower fees and charges
- Less paperwork
- Financial control of your life.
Case Study
Jane is a 29 year old with a good job. She has a mortgage and 4 credit card debts. She had purchased her dream home during the real estate boom and today when the prices have stabilized she is left with owing the bank more money than what the house is worth.
She had purchased her furnishings for her home and as she had no savings the bills on her credit card kept pilling. Making the repayments became harder and harder. She ended up using one credit card to make payments on another and her debts kept increasing to a point where her salary was spent just making the repayments and everyday expenses.
Jane had always had a perfect credit history and had always been sensible with her finances. She realized that with no savings and in her current situation she was looking at a very bleak future.
Her total debt before Debt consolidation was
| Loan Account | Total Amount | Monthly Repayments |
| Mortgage | $ 275,000 | $ 1,800 |
| Credit Card | $ 8,000 | $ 240 |
| Credit Card | $ 5, 500 | $ 137.50 |
| Credit Card | $ 7,280 | $ 182 |
| Credit Card | $ 4,500 | $ 112.50 |
| Total | $ 300,280 | $ 2472 |
A monthly repayment amount of $ 2,472 coupled with everyday living expenses, life was getting hard. She dreaded family holidays and birthdays as it meant spending money she didn’t have. She was too embarrassed to let friends and family know why she had suddenly become a hermit.
That’s when Jane decided to give Golden Touch a call. A new low interest rate loan was negotiated for Jane paying off all her debts of $ 300,280 with one easy payment of $ 1,700. Jane was not only saving monthly but also on the interest that she would have paid on the credit cards in the long run.
Jane was soon in charge of her finances and was making additional payments to clear the loan faster.
If you would like to know more about debt consolidation, give us a call…