Uncategorized

The Best Combined Repayment Strategy with Debt Purchase

If you have an extra extra income that you want to use to pay off a debt, you can combine this operation with a debt purchase. When analyzing this option, a logical question arises: in which order should I do it? In this article we show you how to evaluate the combined repayment strategy with debt purchase.

 

What is a combined repayment strategy with debt purchase?

What is a combined repayment strategy with debt purchase?

This strategy consists in consecutively repaying a loan with the purchase of a debt. There are two ways of doing the same: in the order indicated above, or by reversing it.

To clearly understand this strategy, remember the following:

 

Amortize and go to the purchase of debt, or vice versa?

purchase of debt, or vice versa?

The best order to do this combined operation depends on the conditions of the initial credit, and those of the credit of the debt purchase. The aspects you should consider are the following:

  • The minimum and maximum capital values ‚Äč‚Äčthat allow the purchase of debt.
  • The amount of capital you are going to amortize.
  • The minimum term that you must respect between the purchase of debt, and the first repayment of capital.
  • The interest to be paid for the debt purchase loan.

With so many variables at play, there is no single answer on which order is the best. So you must analyze your particular case, and determine the order that is most convenient for you.

Keep in mind that the difference between the capital owed and the amount of capital to be amortized determines the range of capital that will be subject to the purchase of the debt. Keep in mind that it is likely that the bank, which is going to buy your mortgage debt, gives you a better rate if the value of your debt is higher. Under this line of thought, it would be best to first transfer the mortgage loan and then pay off once your debt is in the new bank.

Virginia Gilbert

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top