Debt restructuring for pensioners

adminonFebruary 1, 2023February 19, 2023Leave a Comment

The loan rescheduling for pensioners and seniors is an opportunity to convert a current loan contract into a new, more favorable one and save money.

The chances of getting a more favorable loan for people after their working lives have increased in recent years, as there are more and more loan offers on the market that simultaneously raise their age limit.

The following overview shows those providers who enable retirees to redeem existing loans:

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Where do retirees get the chance to restructure their debts?

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Debt restructuring offers for pensioners

The instant loan from CreditPlus Bank is recommended for pensioners, especially for smaller sums, because of the lowest initial interest rate. In addition, free unscheduled repayments are possible at any time.

Also the Targobank offers seniors, with a monthly minimum pension of 600 euros, the possibility of the Targobank on-line credit for the redemption of existing credits to use. Especially in the area of annual loans (recommended for new customers), the loan for pensioners and retirees is also ideal for higher loan amounts and the desire to pay the first installment optionally at 59. or 89. Payable the day after loan closing and make free unscheduled repayments at any time.

Why should pensioners reschedule?

For pensioners and retirees there are now more and cheaper loans than before. The increased life expectancy has led to some providers increasing their age limit or dropping it altogether. Therefore, the chance of a more favorable loan has also increased.

Two reasons speak for a rescheduling of loans even at an advanced age:

On the one hand, the loan redemption can be worthwhile if a significantly more favorable loan is available on the market. This is very likely with the current low interest rates.

On the other hand, by increasing the term, the monthly rate can be lowered by switching to a loan provider that allows a longer term due to a higher upper age limit.

For example, the majority of loans have a maximum age limit of 75 years. At the age of 70, a current loan would have a maximum remaining term of five years. With the SofortKredit from CreditPlus, on the other hand, the upper limit is 80 years; with the Top-Kredit from norisbank, it does not apply at all. Thus, by rescheduling the debt, you can stretch the remaining term and thus reduce the monthly installment.

Problems and solutions in debt restructuring for pensioners

Credit chances improve by collateral

Even if now more seniors than a few years ago find loans at some banks, they are still considered to be the target group with increased default risk. This may mean higher interest rates or rejection of the loan.

Who can present however thereby collateral to the bank, which can increase straight in the elevated age its chances on a favorable credit. Many pensioners are, for example, in possession of a paid-off property or a life insurance policy.

Endowment life insurance as loan collateral

If you have a capital-forming life insurance policy, you significantly improve your chances of getting a loan approved. The endowment policy has a surrender value that can be found in the documents. The amount of this surrender value then serves the bank as collateral for the loan. But even in the event of death, the payment of the sum insured serves to secure the loan. A term life insurance policy, on the other hand, cannot be used as collateral, as it does not represent an equivalent value in the event of survival.

Accordingly, pensioners in possession of real estate or endowment insurance should attach the appropriate documents to the loan application!

The options for debt restructuring for seniors

There are two recommended ways for seniors to save money by paying off their loans. The first possibility leads over the rescheduling of the current loan into a more favorable conventional credit. Also a consolidation of several small loans is possible and recommendable, since this can mean not only cost savings, but also more overview, since only a single instead of many monthly installments is to be paid. Debt can be rescheduled both for loans without a specific purpose and for special loans with collateral assignments, such as car loans.

As a second alternative, there are now credit platforms that broker loans from private individuals. The best known are the personal loans from smava or auxmoney. A bank takes over the handling of the personal loan, so that this rather new form of lending is just as secure as a bank loan. The advantage for pensioners is that basically all occupational groups and also age groups are admitted here. It is only important to describe in a description as well as possible his rescheduling project and his financial situation. If enough private investors can then be found for the project, the loan comes about. Of course, the creditworthiness of the potential borrower is also checked by Schufa in this case.

The U.K.'s annual inflation rate fell for the third straight month in January, easing pressure on the Bank of England to raise interest rates, but remained in double digits and near its highest level in 40 years.

The Office for National Statistics (ONS) said annual inflation, as measured by the Consumer Prices Index, fell to 10.1%, continuing a decline from 10.5% in December and its recent peak of 11.1% in October. City economists had projected a modest decline to 10.3 percent.

Driven by a continued decline in gasoline and diesel prices for motorists at the beginning of the year, as well as a drop in prices for air and bus travel after a sharp increase in December.

Prices for restaurants, cafes and takeaways also fell month on month, while the cost of furniture fell as retailers focused on January sales.

The latest figures come as the central bank considers whether further rate hikes are warranted to fight inflation, a move that would increase pressure on borrowers after 10 consecutive rate hikes in the past 18 months.

U.K. inflation remains higher than in the U.S. or the 20 EU countries in the eurozone, and some forecasters have said acute labor shortages in the U.K. and other constraints on the economy such as Brexit could increase inflationary pressures. U.S. inflation fell to 6.4% in January and is estimated at 8.5% in the eurozone.

Grant Fitzner, the ONS's chief economist, said inflation has likely peaked after reaching its highest level since 1981 in October. "Barring geopolitical risks and something completely unexpected, yes [it has peaked] … The general direction seems to be south," he said.

As a cornerstone of his economic plans, Rishi Sunak has promised to halve the annual inflation rate this year. Most economists forecast a decline in coming months amid a drop in global energy prices and as the initial surge in markets following Russia's invasion of Ukraine falls out of the annual inflation gauge.

Wholesale energy and commodity prices have fallen sharply in recent months, including a drop in European gas prices to their lowest level in 17 months. Overall consumer prices, however, remain high and are still rising rapidly, albeit at a slower pace than in December.

Chancellor Jeremy Hunt said, "While any fall in inflation is welcome, the fight is far from over. High inflation stifles growth and causes pain for families and businesses – that's why we must stick to the plan to cut inflation in half this year, reduce debt and grow the economy."

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The ONS said there was further evidence that business costs were rising at a slower pace than in previous months, due to falls in crude oil, electricity and petrol prices.

However, food and drink inflation remained at near the highest rates since the 1970s, with rising prices for milk, bread and other staples pushing prices up by nearly 17% in a year.

Rising prices for alcohol and tobacco also added to upward pressure on inflation, following seasonal price cuts in December.

Charities warned that the rising cost of a week's groceries is putting the most pressure on lower-income households, who spend proportionally more on necessities than higher-income households. Thinktank Resolution Foundation said the poorest tenth of households experienced an inflation rate of 11.7% in January, compared with just 8.8% for the richest.

Helen Dickinson, chief executive of the British Retail Consortium, said food prices remained high due to the knock-on effect of rising energy and fertilizer prices following the invasion of Ukraine. "When the Christmas discounts disappeared, households will have felt the pinch in their weekly grocery store."

The government is preparing to reduce the level of energy support for households and businesses this spring, as charities and business leaders worry that the cost of living emergency in the UK is far from over.

Rachel Reeves, the shadow chancellor, said, "Despite the UK's huge potential, households will be hit by another economic blow in April as energy prices rise. With inflation still near a 40-year high, people will wonder if they and their families are better off after 13 years of Tory government. The answer will be no."

Economists said weaker inflation could ease pressure on the Bank of England to raise interest rates above the current rate of 4%, the highest level since the 2008 financial crisis.

Services inflation fell from 6.8% in December to 6% in January. The figure will be closely watched by the central bank for signs that rising employee wages are causing companies to push up prices.

James Smith, economist at Dutch bank ING, said, "A word of warning: one month does not a trend make. By definition, the Bank of England's focus on "persistence" suggests that policymakers will be less troubled by month-to-month fluctuations in this data. However, we believe that service inflation has likely peaked."

The U.S. Department of Agriculture (USDA) is a branch of the U.S. government that focuses on improving rural conditions, supporting rural and agricultural development and natural resource management. Rural Development is an important program within USDA and includes a comprehensive program that makes fully funded home and real estate loans to qualified borrowers. A USDA mortgage can be an excellent choice for an individual or family planning to purchase a rural property. Although access to a USDA mortgage depends on the circumstances, it is generally considered one of the safest and most affordable home loan programs in the United States.

Originally, the USDA mortgage program was developed primarily to encourage agricultural expansion. Agriculture has long been an important component of both infrastructure and the economy in the U.S., and the creation of home and real estate loan programs helped provide incentives for agriculture. The Federal Farm Loan Act of 1916 helped create the first USDA loans that farmers could use for both buying property and delivering it. Later legislation helped expand USDA mortgage programs to other qualified borrowers to finance land and home purchases and even cover the cost of some repairs and expansions.

Income is a major factor in determining eligibility for a USDA mortgage. Generally, income should be considered low or very low, but the exact limits are based on the median income for the area of residence. Borrowers with qualifying income may be able to obtain a fully funded mortgage, but must demonstrate that they can make the mortgage payments based on their existing income. Mortgage payments are often quite low thanks to a generally low interest rate lock and a 30-year loan term.

Another important requirement for a USDA mortgage is the location of the property. To qualify, the property purchased must be located in an area designated as "rural" by the USDA. A list of designated areas by state is available on the USDA website; borrowers can also contact their local rural housing development office. Some counties may have a mix of eligible and ineligible areas, so it is very important to make sure a property is within a qualifying boundary.

Other criteria may also impact eligibility for a USDA mortgage. Generally, the borrower must intend to use the property as a primary residence; it cannot be purchased to rent to others or to occupy only part-time. In some cases, the borrower must demonstrate that he or she does not have an existing property that will serve as sufficient housing for the household. Although the credit requirements are not as stringent as many other home loan programs, borrowers must still have a relatively good credit score to qualify.