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What are credit holidays and when can you take them?

Credit holidays mainly apply to mortgage loans, although people with cash loans can also apply. Only those who have paid their debts on time will benefit from credit holidays.

 

Credit holidays – what are they?

Credit holidays - what are they?

Credit holidays are an arrangement agreed with the bank (based on a separate document) to skip one (less often several) loan installments. However, this is only a temporary suspension of debt repayment, so it should not be confused with its cancellation.

Detailed conditions for credit holidays are set by the bank where we received the loan. When you apply for a credit vacation also depends on the particular financial institution. Sometimes it is enough to do it a few days before the anticipated problems with repayment, or at least a week in advance.

To be able to take advantage of credit holidays you must submit an appropriate application to the bank. The prepared document should contain information such as: 

  • our personal data, 
  • bank details in which we apply for credit holidays, 
  • description of the commitment that we want to suspend, 
  • our signature (it must match the one on the credit agreement).

Sometimes the bank may require us to justify the application and additional approvals (e.g. to collect a commission for suspending loan repayment).

 

On vacation only with the consent of the bank

On vacation only with the consent of the bank

Even if a bank has a credit holiday in its offer, this does not mean that we can “go” on it arbitrarily (the bank will treat it as a delay in repayment and will draw certain consequences for us, e.g. accruing interest for late payment). Therefore, if we recognize that in our situation credit vacation is a good solution, we must ensure that the formalities related to it.

First of all, we should find out if our credit agreement contains a provision about the possibility of using credit holidays. Secondly, as we have already mentioned, it will be necessary to submit the appropriate application to the bank. Thirdly, after providing all the documents, we will have to wait for the bank’s decision. Only when the financial institution has granted our request will we be released from the need to pay one monthly installment.

Credit holidays in each bank will look slightly different. In one we will have to submit a request for a special print, in another it is enough to “just” present such a request in writing.

The issue of suspending installments also looks different. Here, depending on the specific institution, we will either be able to “rest” from the entire installment, or only from its capital part (it will be added to the next installment, or spread over the remaining installments).

It is also worth paying attention to the time after which we can apply for credit holidays. This is usually possible after paying 6 or 12 (again depending on the bank) installments.

 

Credit holidays and grace period

Credit holidays and grace period

Each installment repaid under the loan consists of the principal and interest parts. The grace period will reduce the monthly installment by only the capital part. The interest part will still have to be paid within the time limit provided for in the contract.

Regardless of whether we are talking about a grace period or credit holidays, a liability that we will not settle now will pay us later. Detailed terms of repayment of our debt can be found in the loan (or loan) agreement or the regulations of the institution.

When analyzing the rules on which we can apply for credit holidays, it is worth paying attention to whether they relate to bypassing the entire installment or only part of it. It is also important how we will have to settle the suspended payment at a later date. You should also understand the fees associated with taking credit holidays. In some banks it will be burdened with only a small cost option, in others we will have to pay dearly for this “pleasure”.

 

Credit holidays are not for everyone

Credit holidays are not for everyone

Unfortunately, not everyone can “go” on credit holidays. Banks give this possibility only to those who have paid their installments on time. It is worth keeping this in mind from the first days of the contract, because you never know if you won’t have to use this option. Thus, credit holidays for some may be an additional motivation to pay their debts on time.

It is also worth knowing that we will not receive credit holidays at every bank. Whether a given financial institution offers them depends on its internal policy. Therefore, before we decide to take a loan, we should check whether we can take advantage of credit holidays where we plan to take it.

 

Are credit holidays worth it? Summary

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Credit holidays consist in postponing a month of repayment (in whole or in part) of your liability. Some banks allow you to suspend repayment installments even once every six months, but most limit this option to one or two times during the entire loan period. Therefore, it is good to think about it when we take advantage of credit holidays and choose a moment of “rest from credit” in which it is really necessary for us (and our budget).

Although credit holidays can be helpful when you are struggling with financial problems, be aware that this is not a free lifebuoy. Information about the costs of credit holidays can be found either in the loan agreement or in the table of fees and commissions of a particular bank.

As a rule, the cost of credit holidays depends primarily on the current interest rate on the loan and on (though to a lesser extent) how many installments we still have to pay. Subsequent repayment of the temporarily suspended installment takes place either by increasing the amount of subsequent installments or by extending the loan period. An overdue installment can also be added to the last installment at the end of the loan period.

Let us remember that credit holidays will not help us solve long-term financial problems.

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Reasons for refusal of your loan

Although each company has its own restrictions and can put more or less requirements when lending money, many of these policies are usually common. Thus, we are going to talk about the most common reasons that lead financial institutions to deny the request for a loan.

 

Borrower’s Age

Borrower

Some entities consider that there are ages that may have more difficulties when repaying a loan. They are usually too young or too old. If you are less than 23 years old or over 65 years old, in some cases it costs you more to convince the entity of your solvency

 

Bank account in your name

Although it may seem strange, there are people who pretend to get loans without even having a bank account in their name. However, if there is something that leads directly to a denied credit, it is lacking a bank account. No credit institution, be it traditional banks or modern companies that operate completely online, will approve a personal loan to an applicant who does not have an account in his or her name. Not only in traditional banks is one of the first things they are going to ask.

 

Insufficient, irregular or unprovable income

Insufficient, irregular or unprovable income

Financial institutions need to make sure that you can meet the repayment of the loan you are requesting. So, if they consider that with your current income you will not be able to meet your payment obligations, it is very likely that they will not approve your request. Not having a payroll does not make things easier, although it is possible to apply for some mini loans and fast credits online. As long as you can justify some kind of income – sufficient, periodic and demonstrable. A pension, unemployment benefit or proof of income tax, in the case of the self-employed, may be as valid as a payroll when assessing the applicant’s solvency level to know if he will be able to return the requested amount.

 

Default history

If you have previously had problems in dealing with a payment with a lender, it is very likely that your loan will be denied.

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What type of savings account can I start saving on?

Learn how saving is not difficult . Sometimes you just need to open a savings account to get closer to the dream of having that fund that allows you to study, travel, get together to buy your first apartment, etc.

For those who do not have financial experience, opening a savings account can raise different questions. In this note we teach you more about the subject and we give you the tips you need to know to choose among the best savings accounts .

What is a savings account?

What is a savings account?

These types of accounts are the best alternative to save money and are usually more flexible than a checking account where there is usually a collection of taxes for some transactions.

One of the benefits of savings accounts is that they help you get profitable. Unlike fixed-term savings accounts , simple savings accounts allow you to have your money available at any time.

What benefits does a savings account offer me?

What benefits does a savings account offer me?

Savings accounts allow you to earn interest for the money you have deposited in them and most of these types of accounts do not charge commissions. Many savings accounts can be opened from scratch soles .

How do I choose the best savings account for me?

How do I choose the best savings account for me?

In order to choose the best savings account it is important that you consider different factors. If you will not use it only to save and you will have the cash in them, the ideal is that you choose a savings account in a bank that has agencies, ATMs, etc. near you.

The best savings account for you may be the one that is most practical. Check that it allows you to make transactions online (if you are one of those who carry out this type of operations).

Also ask how many free-of-charge transactions you have with the type of savings account you have chosen . So you can decide on the one that best suits your needs.

How to open a savings account?

To open a savings account you must approach the bank of your interest with the original and the copy of your identity document. Sometimes a copy of the service receipt is also usually requested. The latter is requested when your address is not the same as that of your ID.

We recommend that before opening your savings account you review the information that the SBS provides. Thus a bank with fewer claims from customers is usually a better alternative.

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A lifetime loan in Hans Clint

A lifelong loan, despite the fact that this has been well known in the Anglo-Saxon countries for almost half a century, this has only been known in Hans Clint since 2006.

The system was legalized in the fall of 2007 when Parliament gave its approval with the amendment of Law 41/2007 to the Mortgage Law of 1981.

A lifelong loan is interesting for people who own a property with a large financial value but who have a shortage of financial resources.

 

What is a lifelong loan?

A lifelong loan is in fact a reverse mortgage, a “Hipoteca Inversa” in Spanish and it is a special loan for older people (+65 years). It allows owners to convert part of their property into money and the loan does not have to be paid back during their lifetime.

The borrower retains full ownership of the property and one can therefore continue to live there until one passes away. Once the two owners or the owner have died, the loan plus the interest must be repaid by either the sale of the property or the repayment. by the heirs. The loan can be taken out in its entirety or the loan can be paid in parts. The older one is, the greater the amount that can be paid out in full.

At no time does the borrower owe more money than the pledge is worth, even if the remaining debt is higher. This means that it is sufficient to leave the building at the time of death.

 

Who is eligible for a lifelong loan?

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In Hans Clint, according to Law 41/2007, only persons older than 65 or persons in possession of a medical certificate are eligible for such a loan.

 

Benefits

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Financial turmoil on a global scale as we have recently experienced can ultimately lead to savings in pension spending by governments.

Only relying on a government pension is therefore a risky business because one cannot foresee the amount of his pension yet the age at which one can retire.

For example, the Spanish government has raised the retirement age to 67 and reduced the retirement amount. Moreover, the government has already announced that in the near future the retirement age will be increased again by three years and will therefore reach 70 years. It is in those situations that a lifelong loan can offer a solution.

  • One should not repay this loan during his life. Unlike a regular mortgage, there are no monthly repayments. If a couple chooses this form of loan, the loan must be paid back after both have died. It is therefore the heirs who are responsible for the repayment.
  • You can choose to receive the total amount in one go or you can opt for monthly payments or even for a combination of the two.
  • There are no restrictions on the withdrawal of the money. You can also use the money to make a big trip.
  • You yourself still your heirs can be held liable for a higher amount than contractually agreed. According to the law, the maximum loan can never be higher than the value of the property.
  • A lifelong loan provides financial security and the loan can supplement a state pension. Not everyone can afford to subscribe to a private pension plan.
  • A lifelong loan allows you to remain the owner of your home and you can continue to live there. According to the law, one cannot lose the property.
  • A lifelong loan does not depend on your status, there is no income requirement.
  • The older you are, the more you can borrow.
  • A lifelong loan is ideal for people without heirs or for people who have problems with their heirs.
  • You can even sell the property but you have to pay back the loan yourself.

 

Cons

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The biggest problem is usually the heirs. Those who have to inherit from you are the most reluctant to have a lifelong loan. The reason is simple: a large part of the inheritance is provided for the repayment of the loan upon your death. In extreme cases, none of the legacy remains for them.

  • The biggest disadvantage is the interest charged. If it is very high, the heirs will inherit little or nothing.
  • With a lifelong loan you will always receive less money than with a normal mortgage, but you have to add another monthly charge there.
  • There must not be any other charges on the property. For example, if there is still a mortgage, the transaction will not be able to continue. Another problem may be that the mortgage has been paid off but that it has not been canceled on registration.
  • A person must be 65 years old to take out a lifelong loan and there is a good chance that this age will still be raised.
  • The younger one is (close to 65 years) the less one can borrow.
  • You have to pay from your own pocket for the valuation of your property, otherwise nobody will make the money available to you.
  • The maximum amount of the loan depends on the value of the property and your age. This amount is normally only a fraction of the total value of the home,
  • A lifelong loan is taken out at your permanent residence. One must therefore stay in this house the entire year. The logic behind this is that the borrower wants to keep the property in good condition. A home that is not inhabited does not remain in good condition.
  • Following the previous reason is that one can no longer rent.
  • If you have to leave the house for a long time, the loan may become due.
  • If you take out a lifetime loan, it is best to provide in the contract how to proceed with major maintenance costs and taxes.

 

Conclusion

money loan

Retiring nowadays is like playing a game in which a party regularly adjusts the rules. Governments now say that this is how it should be today, but tomorrow may be something else.

A lifelong loan can be a good option for you and your partner to have an extra income that allows you to live more comfortably once you have retired.

In any case, seek advice from a specialist.

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Debt collection: Is it possible for the relationship to remain?

Debts are annoying, frustrating, and hurling. No matter which side we stand on. On the basis of my observations, we can say with great certainty that the entrepreneur of today’s age faces at least one time in the course of his operation that one of his customers, clients and partners does not settle the invoice within the given deadline.

The question is, what can we do to recover our receivables, but the relationship is not irreversible.

Effective recovery starts already when there is no debt

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Did you know that the effective recovery of your debts often starts before the actual debts? Does it seem incredible? But this is true. No matter what kind of ammunition we have, we can work. The fewer the well-thought-out and legitimate tools in our hands, the greater the likelihood that the expected result will be missed, the relationship will be irreparably damaged. It certainly wasn’t the purpose of doing business with his client. Think about how much you have worked to build a relationship to get your customer. It would be a pity to lose it just because at the beginning you didn’t think anyone could get into a difficult situation. I am not saying to assume that you will not want to pay later. It’s not about that, because if you feel that way, you shouldn’t go into the business and save yourself from disappointments.

A word, like a hundred, is a precursor to recovering debts.

What preventive steps will help you recover later?

The first and most important thing is to have an appropriate contract between the parties. Because a contract can be created not only in writing, but also orally, so there is always a contract between the parties. The only question is how easy it can be proved later, and how clear it is to determine who, why, when and how much to pay. Because debt collection is harder to recover, the fewer clearer conditions that both sides have previously agreed. It is not at all irrelevant whether we can refer to a written contract or an oral agreement stamped with handshake.

Before you think that a client candidate runs away, if you put a contract in front of your nose, you should consider the situation. The contract must serve and protect the interests of both parties. In this way, it is possible to avoid later surprises, the “I do not understand” objections that not only make recovery difficult, but also damage the relationship.

If there is no other, at least have a written order and one answer.

Although this does not cover all the details, it is definitely better than an oral agreement.

money loan

In the contract, we can also lay down safeguards that can not only help recovery, but may also precede the debt. A client with a liquidity problem will consider how much it will hurt him if he doesn’t pay. For example, a properly defined default interest is not a negligible aspect. There are other options available that can be taken into account in an appropriate contract preparation process.

If we want to keep our customer relationships, then human communication must always be at the forefront. That is, it is not advisable to strike the hardest tools of the law in the first 1-day delay, although this is not the case. Rather, it is the opposite of what is often observed. It is neither good nor even detrimental to the chances of recovery if you do not take appropriate legal action for too long. But what can we do if we do not want to be too hard, but is efficiency important?

It is not worth to wait without a word. If the customer just forgot about the payment deadline, be sure not to take the wrong name, if we kindly remind you, we ask if the invoice was successful. However, if the payment is not received because the customer is in “financial trouble”, the better you see it as soon as possible. In such a case, many people do not choose what they are paying for and what they do not, but on the basis of their feelings. That is, they try to “get away with it” as long as they can, so they pay for those who are not just waiting quietly.

After a while, the phone, the interested e-mail?

It is time to take things a little more seriously. The payment request may follow. This will be sent in writing to provide you with the necessary torque and to provide a good basis for a controversial situation later on. You can also have a polite tone in your payment request, but be factual. We tell you how much the debtor is entitled to by the contract, what the payment deadline was, how long he has been late and what other obligations have arisen for this, ie how much the default interest or the cost to be paid is. Notice that we will send the letter to the correct address. If this is not specified in the contract, the debtor’s domicile, in the case of a private individual, is the permanent address. In the notice, let us also set a deadline for settling the debt, but this should not be too long.

In vain, the debtor still does not pay?

The recovery of legal claims will sooner or later require the use of legal instruments that can help to resolve the situation If we have already tried kindly, with interest, we have sent out the factual notice, and yet the amount is not received, it is time to face the issue more seriously. situation. At this point it is advisable to ask for legal assistance and to discuss the possibilities with a lawyer. This may result in non-litigation or court proceedings for issuing a payment order.

Legal options alone do not guarantee full success in every case, because if a debtor does not have the money, he does not have to recover from it. However, it does not matter how long we wait when we enter the line of creditors.