Re-applying for a home loan or remortgage, as it is popularly known, is not a free exercise and would require applying for a new loan, which a consumer undergoing a debt review cannot legally do.
A Fin24 reader who took debt advice was able to pay off two massive amounts of debt, but still has her home loan to pay. She wants to know if removing him from the debt counseling would benefit her.
I have been under debt counseling since 2017 and two of the main debts have been paid. I still have the home loan. It was 9% interest with debt counseling.
Currently, the general interest rate is 7%. Will it be advantageous for me to remove the mortgage loan from debt counseling? Will it cost me extra fees?
Benay Sager, COO at DebtBusters, respond :
Debt counseling has significant benefits, mainly due to credit providers willing to offer concessions to consumers through reduced interest rates and reduced monthly fees while the consumer is subject to debt counseling. debt. It is of crucial importance for the consumer to complete the period of debt counseling in order to reap all the benefits of reduced payment and to demonstrate their commitment to the process. This applies to home loans, as home loans typically benefit from reduced payments and lower interest rates when under debt counseling. Therefore, it is recommended that consumers complete their debt counseling pledge.
A consumer receiving debt counseling is eligible to receive a clearance certificate after they have paid (meaning there is no balance owed) all of their non-mortgage accounts and that he is up to date with his mortgage payments (which means there are no arrears on the mortgage). Once a Certificate of Authorization is issued, mortgage payments automatically revert to monthly payments and pre-indebtedness advisory interest rates.
In this case, the consumer suggests that he has paid all of his debt other than a mortgage. If this is the case, the consumer must benefit from a certificate of discharge (provided that he is up to date with his mortgage payments). Consumers should inquire about this with their debt counselor.
If this is not the case (i.e. the consumer still has non-mortgage accounts and a mortgage account for debt counseling), it is not advisable to withdraw the mortgage from debt counseling. Besides that it is not legally possible for the consumer to voluntarily “delete” a particular account from the debt counseling, it is also not recommended because the consumer would no longer benefit from the lower monthly payment and the interest rate lower than 9% . for a home loan or new mortgage, as it is popularly known, is not a free exercise and would require applying for a new loan, which a consumer undergoing a debt review cannot legally do.
Finally, while the prime rate is 7%, each mortgage application is assessed on merit, and there is no guarantee that the consumer will benefit from a better rate than the one he currently enjoys. Our recommendation for the consumer would be to explore with their debt counselor if they are eligible for a clearance certificate (if they have completed all non-mortgage loan payments and are up to date with their mortgage) and proceed. the conversation from there.
Questions can be edited for brevity and clarity.