You may have heard about selling the mortgage portfolio but you are not sure what the benefits are when making a mortgage debt transfer. In this case it is better to take a few minutes to evaluate this possibility.
The purchase or transfer of mortgage debt (depending on the perspective) is a strategy used to carry a mortgage debt from one entity to another. This financial transfer implies certain benefits.
Are the benefits worth it when making a mortgage debt purchase?
It is definitely worth selling the mortgage debt if you get the following:
- Greater savings capacity: The transfer of debt from one entity to another apart from an improvement in the state of your finances may involve, among other things
- A lower interest rate: Precisely the possibility of greater savings is due to the fact that the financial institution interested in buying your loan can offer a lower interest rate.
- a longer term for the payment of the loan: Similarly, in the negotiation with the financial institution interested in investing in liabilities such as your mortgage debt, there may be the offer of more time to pay.
- Additional benefits: Apart from a convenient decrease in interest rates, the financial institution may offer you some of its products, such as a credit card or life insurance.
In summary, among the possible benefits of making a mortgage debt purchase you would have a better financial status, a lower interest rate and a longer time to pay.
Are there risks associated with the mortgage transfer strategy?
In addition to the aforementioned benefits when making a mortgage debt transfer, there are also risks. Among the risks you must face are:
- Delay in payment: it is possible that a reduction of the interest rate implies an extension or bulge of the installments and with it the risk of falling into default.
- Over-indebtedness: The consolidation of debts can lead to the opening of other debts and thus to an inconvenient accumulation.
In conclusion, by selling your mortgage debt as well as you can get a considerable slack in your budget with lower installments you can also over-borrow.