Merging the payday loan and mortgage or curious about the possibilities in this area? In a number of cases it is possible to combine the two loans and thereby reduce the costs of the total credit. This is not due to the debt that is decreasing in size, but to the fact that the interest rate on a mortgage is generally lower than that on a payday loan.
Do you have a payday loan to finance a residual debt and a mortgage in relation to the value of the home? When you have made repayments on the mortgage or the value of your home has increased, you can merge it in some cases.
Conditions from the bank
Keep in mind that the bank sets conditions for merging the payday loan and the mortgage. For example, it is important that the amount of your income is sufficient. You can borrow money based on the amount of your income, because this determines what amount of money you have available and how you can ensure payment of the costs.
In addition, for merging the payday loan and the mortgage it is very important that the amount of your mortgage is in proportion to the value of the home. A bank may lend you a maximum percentage based on the value of the home. This has the loan-to-value ratio. It is only when the value of the home increases that it is possible to increase the mortgage, provided that the income is also high enough. In this way it is possible to combine the payday loan and the mortgage, so that you have the possibility to reduce the total interest costs.
Mortgage interest was already deductible
Do you want to merge the payday loan and the mortgage to deduct the interest you pay? For this it is not necessary to combine the two loans. The interest on a payday loan is also deductible if you meet specific conditions.
It is important that you use the payday loan for the purchase, improvement or renovation of your first owner-occupied home (the main residence). Is there a residual debt and do you use the payday loan for that? In such cases, the interest has been deductible since 29 October 2012, for a maximum period of 15 years.