Mortgage loans have become the solution of many citizens to obtain their first home or change the one they already have for a better one. However, the increase in interest rates makes many users wonder: can I repay my mortgage loan?
What is repairing a mortgage loan?
The procedure of repairing a mortgage loan , or of another nature, is that by which, on a voluntary or suggested basis, the debtor redoes the original agreement of a loan in order to modify the original payment conditions, either by increasing the term, modifying the fees, among others.
You can do this process in the same bank where you applied for the mortgage loan or in another entity that can offer you better interest rate. In this way you access better payment opportunities by repairing the mortgage loan.
When to repay a mortgage loan?
A mortgage loan is a debt that is incurred for a few years, so sometimes the payment of fees may be affected by circumstances beyond our control, such as unemployment, medical expenses, the birth of a child, among other unplanned expenses. .
So repairing a mortgage loan is an operation that many take as the solution when they need to change the initial conditions of the contract, allowing them to extend the term, reduce the interest rate or modify the value of the installments.
When your mortgage credit interest rates increase you can repair your mortgage credit and get a lower rate, improving your payment possibilities. When a debt is repaired, the previous one is invalidated and a new one is created under new conditions.
How to repair a mortgage loan?
If you want to repay your mortgage credit you must take into account that it is different when you carry out the operation in the same bank where you requested the credit than when you refinanced it in another bank.
The first case is less likely because if you have your mortgage credit in a bank where interest rates went up, it is very unlikely that they want to repay your mortgage credit in better conditions. At most they could extend the term, but as we all know that only means one thing: you pay more interest.
On the other hand, repairing your mortgage in another bank allows you to set better conditions. Another bank may offer you a better rate and be fixed, so you renegotiate your debt with a new bank and they buy your debt from the original bank.
Advantages and disadvantages of repairing a mortgage loan
Repairing your mortgage loan may be the solution to solve the lack of liquidity necessary to pay your current installments, so this operation has its benefits:
You can access lower interest rates in other banks.
You can select a mode that best suits your current needs.
It allows you to reconsider the conditions you initially accepted.
All previous obligations, including arrears, die with the old debt and start “from scratch” with a new one.
If you were sued for non-payment, repairing the debt will stop the embargo process and you will not lose the house.
On the other hand, not everything is positive, so you should also evaluate the disadvantages of repairing your mortgage credit:
You acquire a new debt that is reflected in your credit history .
If you decide to extend the term you end up paying much more than with the original agreement.
You must weigh the administrative expenses acquired for repairing your debt.
It is a short-term solution, so you end up in a vicious circle of renegotiations that will make you pay much more than you should initially, since you can fall behind again and be sued.
You run the risk of losing the prescription of the previous debt.
Repairing a mortgage loan is a measure that can be imposed by the bank for delays in the payment of fees. However, usually the client does so voluntarily to seek to improve payment terms. We recommend you evaluate the pros and cons of repairing a debt before doing so in order to always guarantee the cleanliness of your credit history.