Why be honest about your debt situation?
Most people borrow during their lives. Housing is rarely bought in cash and sometimes loan costs are required to cover unexpected expenses. Nowadays, loans are also used to raise equity, for example, leverage is often used to invest in housing to increase return on capital.
Repayment of debts
Although repayment of debts is commonplace for many people, there are situations in life where the burden of debt becomes too heavy and repayment difficult. Personal life challenges such as divorce, unemployment, various addictions or illness exposes you to over-indebtedness and problems in repaying your loan.
In the end, the situation may be that the money for daily living goes to pay off debts. At its worst, debt can reduce the quality of life so much that money for everyday living is no longer enough – even food and other necessities may have to be compromised. In that case, you will usually not be able to pay off your loan repayments.
The difficult economic situation may also lead to a situation where new loans are taken to repay old debts and the debt spiral deepens. If the debt cannot be paid on time, costs and interest will start to accrue and debt will continue to grow. This may make it almost impossible to break the debt spiral.
Arranged loan for financial management
The most important thing to take care of your own finances is to find out your own income, compulsory expenditure, debts and their monthly installments. The calculations must also take into account the interest and other costs of the loans. Once you have the basics of your own finances, you can start to improve.
If there are multiple payables and financial management is difficult, a mortgage loan is a viable option.
A loan arrangement can combine many different types of loans into one and often cheaper loan. With the help of a structured loan, monthly installments can be adjusted so that money remains in the day to day running costs, even after paying the bills. Combining loans can also reduce interest costs.
Before applying for a mortgage loan, find out how much of the loan you should apply for to cover the entire aggregate debt plus interest. As a rule, a maximum loan of USD 50,000 is granted, so the amount borrowed should be below it.
Arrangers give varying views on defaults. Some lenders grant a structured loan even if the borrower has a default payment.
When applying for a restructuring loan, honesty about your own debt situation is worthwhile
Over-indebtedness is often a source of shame and people want to keep their money problems secret. It may seem difficult to ask for help, but when applying for a restructuring loan, honesty about your own debt situation is worthwhile. The sooner you dare to face your situation and seek help in paying off your debts, the easier it will be to get the situation back under control.
Below are some good reasons to be honest about your debt situation – especially if you are considering a mortgage loan.
1. Get a complete picture of the problem
By telling you honestly about your indebtedness, the mortgage lender will get a complete picture of the situation and know how to get the economy back under control. Admitting one’s own situation is an important first step towards a solution.
2. Get Support
Get advice and support on the situation. You do not have to think about the best option by yourself, when you can ask the experts directly for advice. The issuer of the loan facility may also contact the creditors and apply for a reasonable loan. You can contact the mortgage lender in case of payment problems. This is how you can work together to solve the situation.
3. Obtaining a settlement loan will accelerate
When you openly and truthfully tell about your own debt situation, it is easier to get rid of it. This will also help you get faster access to the arrangement loan. Covering one’s own debt situation can also, in some cases, prevent you from obtaining a loan because mutual trust is important when granting a restructuring loan.
4. Get a personal loan offer
You will receive a loan offer from the lender who takes into account your income, expenditure and loan. With a personalized loan, you get more control over your finances and lower monthly installments. Often, interest rates can also be lowered through a structured loan.
5. You can get a joint and several loan applicant
An application for a mortgage loan loan often requires at least one person in solidarity to secure the loan repayment. For example, a parent or sibling may be jointly and severally liable. Transparency in the situation helps to get a solidarity borrower.