Want to get rid of your existing loans? We have a good news: it can be used to redeem a baby loan! A baby-sitting allowance is a free-standing personal loan that can have any credit purpose.


The baby loan has started

The baby loan has started

As of July 1, you can apply for a baby loan as part of the government’s Family Protection Action Plan. The maximum amount of the loan is USD 10 million, but the maximum amount of credit that can be claimed depends on the existing bank loan debts and the monthly income of the debtors, ie the married couples.

Some banks expect at least a minimum wage per spouse, while others require a net income of $ 180-200,000 at the transaction level, that is, the combined income of the spouses. Before applying for a loan, you should check with the bank that offers the best conditions for your family’s income situation.


Baby loan for redemption

Baby loan redemption

A baby loan is a freelance personal loan, meaning it can be used for anything. We can buy a car, government paper, or even replace our existing loan.

There are banks that do not take into account the monthly installment of our existing mortgage or personal loan when calculating the maximum amount of credit that can be used to redeem a baby loan. This is also logical, because in this case we use the amount of our baby loan immediately as a final repayment, so after that our previous loan is terminated, so we do not have to pay the installments. It is definitely worth replacing your existing home loan with a baby loan, as baby loans are interest-free, while mortgage rates are around 4-5 percent. This could save you hundreds of thousands of forints annually.


An example of redeeming a loan with a baby loan

An example of redeeming a loan with a baby loan

Let’s look at an example: if a family borrowed $ 10 million home loan for 5 years at an interest rate of 4-5 percent for 5 years, their monthly installments range from $ 55 to $ 65,000. Of the 10 million forints taken out, the interest, including interest, will be 13-15 million forints in 20 years. Of this, 3.5 million forints have been repaid over the past 5 years (5x12x60.000 USD), that is, nearly 10 million forints of the outstanding debt, which is the maximum amount of loan that can be applied for. Since the baby loan is interest-free and the monthly repayment installment cannot be higher than USD 50,000 (at most banks it is around USD 46-47,000), the monthly repayment installment of the family can be reduced by as much as USD 10-15,000. This means annual savings of USD 120-180 thousand.

This example is only valid if the amount of approved baby loan is equal to or greater than the existing loan debt. The financial institution where we applied for our existing credit or where we pay off the monthly installments can provide information on the outstanding debt from our previous loan. This is mostly our own bank.

Therefore, it is worth applying for a baby loan that meets the conditions set out in the government decree, as the baby loan can be used for loan repayment or for any other purpose of your choice.

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