Debt consolidation companies offer various debt consolidation services for all kinds of loans and debts. It can be a wonderful tool for you to erase the huge pile of debts in a short span of time with no much worry. In normal cases, there is no limit in how much you can borrow as a debt consolidation loan except for the case, where the only amount of debt is so high and the financial condition is so weak that the only option is to go for bankruptcy. In some cases, you can even borrow as much as 125% of your total dues.
What is 125% loan?
The 125% loan offered by various debt consolidation companies is a loan to value loan. Under this provision, you can borrow up to 125% of the value of your home. Let me give you a simple example. If the value of your home is $1,000,000 and the same is the value of the mortgage debts on the house, under the provision of 125% loan, you can borrow $1,250,000. It means you can borrow $250,000 more than the value of your home.
What's the catch?
Well, it is not just that the debt consolidation companies offer 25% more than the value of the house. They charge a typically much higher rate of interest. The rate of interest is even higher than the traditional mortgage loans. In addition to that, the debt consolidation company may also charge the origination fee to set up the loan as much as 10% of the loan balance, which is much higher than the traditional lenders charge.
Who is eligible?
Not everybody can get the 12% loan to value loan. It is only if you have an excellent credit score that makes you eligible for this kind of debt consolidation loan.
Overall, such debt consolidation services are an excellent choice for those who may otherwise have no access to money.
Gibran Selman takes care of http://debtconsolidationcenter.net a website dedicated to gather information, on and off the internet, about debt consolidation and other related subjects. Visit the website at: http://debtconsolidationcenter.net for hundreds of articles and other resources about debt consolidation.
[tags]debt, consolidation, loan, 125%[/tags]
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