Everyone wishes to own a home at some or the other time in their lives. But not everyone has a huge resource in the bank that they can tap and purchase the home that they dream of. Some people have to look at other options that need to be used to buy a home. Home loans are one of those options which have gained a lot of popularity in the last few decades. As realty continues to be a lucrative investment option as well, there are many who opt for home loans for this one reason. There are many home loan programs out there. So a bit of research on your part might be required to select the right home loan for you.
The Down Payment
The down payment is the key to reducing your monthly payments. More the amount you pay as down payment, lesser you will have to pay off every month. So it is recommended that you keep at least some percentage of the principal loan amount with you before you start to hunt for a home loan. Along with the home loan there will be other expenses as well like mortgage insurance, registration fee, finance charges etc.
The Type of Loan
There are so many loan programs out there that you might well end up getting confused over which is the right one for you. By all means, you can seek the help of a professional consultant who will help you understand the pros and cons of each loan program. There are fixed rate programs which might seem like a great option when interest rates in the market are rising. However, they might seem like a drag as they cannot be altered later on without paying a huge penalty and you have to pay the same interest for a long time to come.
Floating or adjustable rate mortgages are an option that is great for people who are looking at short term mortgage loans. The rate keeps fluctuating along with the market interest rates. So it might jump or plunge depending on how the market is performing.
The Total Cost
One mistake that many borrowers make is that they just look at the rate of interest in the loan program. But what they miss out on is the fact that there are other charges as well like the monthly or annual administration fees. Remember, it's the total amount that you need to pay off every month that matters. Not just the rate of interest.
Statement Errors
Even a minor error in the loan statement can benefit the lender and harm the borrower. So you need to check your statement quite regularly for any errors. The error might be as simple as an incorrect entry but that can rob you of a few thousand dollars.
Get Multiple Quotes
You need to compare quotes from several different lenders before you sign up for a loan program. This is very important for you to find the loan program with the lowest monthly payments as well as the most flexible options. A mortgage broker might help you find the best lender suited for you. It also gives you a lot of options to choose from.
Consider Refinancing
If your financial condition has improved since you took a loan, then you can actually qualify for a better interest rate now. So you might want to consider refinancing your loan. This will not only help you to lower your monthly payments, but also help you to save a lot of dollars in the long run.
About the Author
Home Loans Some tips for buyers who are looking for a home loan. The article describes the various terminology related to home loans and also how a borrower can reduce the hassles in the entire loan process.
Thursday, March 29, 2007
You Can Get A Second Chances For Credit
A lot of people give up when they feel like their credit is ruined. They don't feel there is any point to trying to apply for things that they want because of their tarnished credit. However, gaining knowledge on what you are eligible will help you to achieve the things that you need without having to worry about credit issues.
Each creditor will set their own standards for deciding whether or not you are eligible to be approved, and their views on your credit history will vary. There are some that will only look at your record from recent years, and some will be more lenient with giving you credit if it appears that your payment history has steadily improved.
A good way to determine whether or not you will qualify with a company is to call the creditor directly and discuss their regulations with them. The worst that could happen is that you could be denied, and even though this may be an incredible blow to your ego, you will not be any worse off than before you made the phone call.
Many creditors are open to working out a repayment schedule. However, you should only consider this option if you are unable to work out a schedule for yourself but you feel like you can work under the deadlines of a creditor's budget. There will be no good result if you waste someone's time making them find the best option for you, and then fall behind on your payments again.
There are also credit organizations as well as non profit companies that are dedicated to helping people get on schedule with their payments, but try to research these companies before enlisting their help because they are not always trustworthy. You should also make sure that you learn about all of their fees upfront whether they are higher than average or hidden fees. Also, just because a company is non-profit, it doesn't mean that you have to make a contribution.
If you were in a position to give money away, you would not be requesting their help. If you are going to get help from a management company, make sure that you find one that will conduct their services in person as opposed to the Internet.
Many people feel like the only way they can find relief is to file for bankruptcy. This is not always the best option. It will take years to get back on track, and all of the worries that you may have had before about buying a home, or getting a credit card will be far out of reach when you file for bankruptcy. However, if you are firm with your decision you should know that as of October 2006 a new amendment was added to the bankruptcy laws which stated that you must seek credit counseling within six months of filing for bankruptcy. So, if you have to find a service anyway, you might want to try paying some penance for your mistakes and start paying people back.
A few mistakes on your credit won't ruin it forever; there are ways around it and ways that you can re-establish good credit. Don't give up, there is still a chance that you will have that home or car. The best thing to do is to make an honest attempt to fix your mistakes. Talk to your creditors and find out what you can do to fix it and maybe with a little hard work you can get your creditors to forgive you and offer you the opportunity of a second chance.
About the Author
John Edmond runs Credit Card Debt where you can read many more articles on bankruptcy and for the latest information on personal loans checkout the blog.
Each creditor will set their own standards for deciding whether or not you are eligible to be approved, and their views on your credit history will vary. There are some that will only look at your record from recent years, and some will be more lenient with giving you credit if it appears that your payment history has steadily improved.
A good way to determine whether or not you will qualify with a company is to call the creditor directly and discuss their regulations with them. The worst that could happen is that you could be denied, and even though this may be an incredible blow to your ego, you will not be any worse off than before you made the phone call.
Many creditors are open to working out a repayment schedule. However, you should only consider this option if you are unable to work out a schedule for yourself but you feel like you can work under the deadlines of a creditor's budget. There will be no good result if you waste someone's time making them find the best option for you, and then fall behind on your payments again.
There are also credit organizations as well as non profit companies that are dedicated to helping people get on schedule with their payments, but try to research these companies before enlisting their help because they are not always trustworthy. You should also make sure that you learn about all of their fees upfront whether they are higher than average or hidden fees. Also, just because a company is non-profit, it doesn't mean that you have to make a contribution.
If you were in a position to give money away, you would not be requesting their help. If you are going to get help from a management company, make sure that you find one that will conduct their services in person as opposed to the Internet.
Many people feel like the only way they can find relief is to file for bankruptcy. This is not always the best option. It will take years to get back on track, and all of the worries that you may have had before about buying a home, or getting a credit card will be far out of reach when you file for bankruptcy. However, if you are firm with your decision you should know that as of October 2006 a new amendment was added to the bankruptcy laws which stated that you must seek credit counseling within six months of filing for bankruptcy. So, if you have to find a service anyway, you might want to try paying some penance for your mistakes and start paying people back.
A few mistakes on your credit won't ruin it forever; there are ways around it and ways that you can re-establish good credit. Don't give up, there is still a chance that you will have that home or car. The best thing to do is to make an honest attempt to fix your mistakes. Talk to your creditors and find out what you can do to fix it and maybe with a little hard work you can get your creditors to forgive you and offer you the opportunity of a second chance.
About the Author
John Edmond runs Credit Card Debt where you can read many more articles on bankruptcy and for the latest information on personal loans checkout the blog.
The Mortgage Types And Repayment Options
Unfortunately in recent years mortgages have become increasingly complex and wrapped up in technical jargon. Borrowers now need to consider at least two things, the type of mortgage loan they want and how they are going to repay it. Have a look at your options below.
Types Of Mortgages
Variable Rate Mortgage
Rates on these loans fluctuate in line with general interest rates but because they are at the lenders discretion they dont necessarily move as far, or as fast. Discounts are usually offered to new borrowers in the early years.
Tracker Mortgage
Rates on tracker loans are normally linked directly to movements in the Bank of England base rate. The link may be for a limited period rather than the life of the mortgage.
Cashback Mortgage
When these loans are granted, cash payments are given to borrowers to spend how they like. They are typically between 6 per cent and 8 per cent of the loan.
Fixed Rate Mortgage
Rates of interest on these loans are guaranteed not to change for a specified period, typically the first three to five years of the mortgage.
Capped Rate Mortgage
With this type of loan, the interest rate is guaranteed not to exceed a fixed level during the capped-rate period. The advantage is that it can go down if rates are cut.
Repayment Methods
Repayment Mortgage
Also known as capital and interest mortgages because part of the monthly payments gradually pays off the loan while the remainder covers the interest on the amount outstanding.
Offset Mortgage
These loans are taken out in conjunction with a current account or savings account. Regular mortgage repayments are required but at the same time the cash in the other accounts helps to reduce the loan, thereby saving interest. This can help to speed up repayment of the mortgage.
Interest Only Mortgage
As its name implies, the borrower pays the interest only on the loan during the mortgage term so the capital remains outstanding. Payments may also be made into a savings scheme, such as an Individual Savings Account, to repay the capital at the end of the term. Sometimes the loan is repaid out of the sale proceeds of the property.
Endowment Mortgage
This is where an interest-only loan is combined with a life assurance with-profits policy intended to pay out a sufficient sum to clear the mortgage at the end of the term. But endowment policy payouts are not guaranteed and many are currently expected to produce shortfalls.
What You Need To Look Out For
Arrangement Fees
Most lenders nowadays charge you for the work involved in setting up a mortgage or to reserve a loan at a particular rate. The amounts can vary considerably between lenders. Paying more doesnt always get you a better deal.
High Lending Charge
If you are borrowing more than 90 per cent of the property value, check to see whether you will be charged an extra fee. This is to protect the lender in case you fail to keep up the payments, but not all of them make this charge.
Insurance
Some lenders will offer you a lower mortgage rate if you buy their home insurance products. They will also encourage you to take out their mortgage payment protection policy. It is usually better to shop around for the cheapest insurance deal.
Early Redemption Penalties
With mortgage special offers, fixed rate deals, etc, you will normally be charged a penalty if you pay off your loan within the offer period. In particular, try to avoid those loans with redemption penalties that extend beyond the end of the offer period as you will be stuck on the lenders standard variable rate.
Initial Disclosure Documents And Key Facts Illustration
Initial disclosure documents (IDDs) spell out mortgage advisers services, such as whether they can recommend products from one company only, or are free to sell mortgages from all lenders. Key facts illustrations (KFIs) are given to borrowers when they apply for or are recommended a mortgage. These outline the mortgages cost over its term, repayments, fees and an interest rate expressed as an annual percentage rate (APR).
Annual Percentage Rate
The APR tells prospective customers the interest rate over the life of the mortgage. This factors in any initial offer rate and then the lenders standard variable rate to which the mortgage reverts, as well as the impact of fees. The APR in the key facts document does not reflect that many mortgage borrowers switch to better deals than the lenders standard variable rate (SVR) after their initial offer expires. Neither does it include the potential costs on leaving the mortgage, such as administration fees and early repayment charges.
Standard Variable Rate
Because house prices are at a record high many people (probably including yourself) are now thinking of their mortgages in the long term as well as the upfront rate. For this reason it is worth knowing what current customers are paying. It is highly unlikely that when you come to the end of your fixed or discount rate period you will be on the same SVR as current customers. But you can use the information to see how the lender compares against others in the market.
About the Author
James Copper enjoys writing on all areas of personal finance. He works for Any Loans who specialise in the Adverse Credit Remortgage and Adverse Credit Loans.
Types Of Mortgages
Variable Rate Mortgage
Rates on these loans fluctuate in line with general interest rates but because they are at the lenders discretion they dont necessarily move as far, or as fast. Discounts are usually offered to new borrowers in the early years.
Tracker Mortgage
Rates on tracker loans are normally linked directly to movements in the Bank of England base rate. The link may be for a limited period rather than the life of the mortgage.
Cashback Mortgage
When these loans are granted, cash payments are given to borrowers to spend how they like. They are typically between 6 per cent and 8 per cent of the loan.
Fixed Rate Mortgage
Rates of interest on these loans are guaranteed not to change for a specified period, typically the first three to five years of the mortgage.
Capped Rate Mortgage
With this type of loan, the interest rate is guaranteed not to exceed a fixed level during the capped-rate period. The advantage is that it can go down if rates are cut.
Repayment Methods
Repayment Mortgage
Also known as capital and interest mortgages because part of the monthly payments gradually pays off the loan while the remainder covers the interest on the amount outstanding.
Offset Mortgage
These loans are taken out in conjunction with a current account or savings account. Regular mortgage repayments are required but at the same time the cash in the other accounts helps to reduce the loan, thereby saving interest. This can help to speed up repayment of the mortgage.
Interest Only Mortgage
As its name implies, the borrower pays the interest only on the loan during the mortgage term so the capital remains outstanding. Payments may also be made into a savings scheme, such as an Individual Savings Account, to repay the capital at the end of the term. Sometimes the loan is repaid out of the sale proceeds of the property.
Endowment Mortgage
This is where an interest-only loan is combined with a life assurance with-profits policy intended to pay out a sufficient sum to clear the mortgage at the end of the term. But endowment policy payouts are not guaranteed and many are currently expected to produce shortfalls.
What You Need To Look Out For
Arrangement Fees
Most lenders nowadays charge you for the work involved in setting up a mortgage or to reserve a loan at a particular rate. The amounts can vary considerably between lenders. Paying more doesnt always get you a better deal.
High Lending Charge
If you are borrowing more than 90 per cent of the property value, check to see whether you will be charged an extra fee. This is to protect the lender in case you fail to keep up the payments, but not all of them make this charge.
Insurance
Some lenders will offer you a lower mortgage rate if you buy their home insurance products. They will also encourage you to take out their mortgage payment protection policy. It is usually better to shop around for the cheapest insurance deal.
Early Redemption Penalties
With mortgage special offers, fixed rate deals, etc, you will normally be charged a penalty if you pay off your loan within the offer period. In particular, try to avoid those loans with redemption penalties that extend beyond the end of the offer period as you will be stuck on the lenders standard variable rate.
Initial Disclosure Documents And Key Facts Illustration
Initial disclosure documents (IDDs) spell out mortgage advisers services, such as whether they can recommend products from one company only, or are free to sell mortgages from all lenders. Key facts illustrations (KFIs) are given to borrowers when they apply for or are recommended a mortgage. These outline the mortgages cost over its term, repayments, fees and an interest rate expressed as an annual percentage rate (APR).
Annual Percentage Rate
The APR tells prospective customers the interest rate over the life of the mortgage. This factors in any initial offer rate and then the lenders standard variable rate to which the mortgage reverts, as well as the impact of fees. The APR in the key facts document does not reflect that many mortgage borrowers switch to better deals than the lenders standard variable rate (SVR) after their initial offer expires. Neither does it include the potential costs on leaving the mortgage, such as administration fees and early repayment charges.
Standard Variable Rate
Because house prices are at a record high many people (probably including yourself) are now thinking of their mortgages in the long term as well as the upfront rate. For this reason it is worth knowing what current customers are paying. It is highly unlikely that when you come to the end of your fixed or discount rate period you will be on the same SVR as current customers. But you can use the information to see how the lender compares against others in the market.
About the Author
James Copper enjoys writing on all areas of personal finance. He works for Any Loans who specialise in the Adverse Credit Remortgage and Adverse Credit Loans.
Multi Facet Loans From Canada
To apply successfully for a loan, try to imagine yourself in the position of the lender and see if you have the answers to why exactly you need the money, what your assets are, and how you plan to repay the loan. Get your business plan in place so that you are able to convince the lender why you want the loan and how you plan to spend the money. It is best that you mention a concrete financial data complete with how you would repay the loan. If you have an established business and are looking for further expansion, you will also need to submit your past tax returns. Your credit card ratings will also affect your chances of getting a loan.
Canada Loans for Small Business
If you are planning to set up a small business, and you need to purchase or improve your real property and immovables, improve lease property or purchase new or used equipment, you need to be aware of the Canada Small Business Financing Program that aims at encouraging financial institutions and leasing companies including banks, credit union or caisse populaire to make their financing services available to entrepreneurs wishing to set up small scale businesses. Under this program, if the loan or lease is granted by the financial institution or the leasing company, the federal government will reimburse 85 percent of the lender's or lessor's losses in the event of default.
As a borrower, you can avail of up to 90% of finance to cover the cost of asset acquisition or asset improvement. The maximum loan that you can avail of is $250,000. Again, if a particular financial institution does not grant you the loan, you can forward your application to another financial institution that is part of this program. The maximum interest rate that a lender or a financial company may charge on a commercial loan is prime plus 3% on floating rate, or the lender's residential mortgage rate plus 3% on fixed rate.
The Canada Small Business Financing Program also offers special benefits for women. As a Canadian woman, if you are interested in setting up your business, you can avail of a loan easily under this program. The pre-condition is that the business should be completely or at least 50% owned by a woman or women. Again, where you live will also make a difference for the program extends loans to only particular areas in Canada.
Canada Loans for Women
Canada loans for women include the Women Entrepreneur's Fund. Under this scheme, The Business Development Bank of Canada (BDC) has earmarked a $25 million fund to enable women entrepreneurs to seek new opportunities, or expand the existing ones in business areas such as food, health, software and manufacturing.
Then again, there is the AFER Program for Women in Rural Communities - Reseau des SADC du Quebec. As the name itself suggests, the program caters to the women who reside in the rural communities. For this, they can avail a business loan of $25,000 to cover start-up costs.
Canada Loans for Students
As a student, if you wish to attend a post-secondary education institution, you can raise the required funds under the Canada Students Loan Program, which is a special program designed to take of the demonstrated financial needs of the students. Before deciding on a loan, you need an estimate of the cost of your post-secondary education. The counselors in the colleges or university that you have in mind will be able to guide you regarding your loan requirements, and on issues such as saving, planning and paying your loan.
Canada Loans for Small Business
If you are planning to set up a small business, and you need to purchase or improve your real property and immovables, improve lease property or purchase new or used equipment, you need to be aware of the Canada Small Business Financing Program that aims at encouraging financial institutions and leasing companies including banks, credit union or caisse populaire to make their financing services available to entrepreneurs wishing to set up small scale businesses. Under this program, if the loan or lease is granted by the financial institution or the leasing company, the federal government will reimburse 85 percent of the lender's or lessor's losses in the event of default.
As a borrower, you can avail of up to 90% of finance to cover the cost of asset acquisition or asset improvement. The maximum loan that you can avail of is $250,000. Again, if a particular financial institution does not grant you the loan, you can forward your application to another financial institution that is part of this program. The maximum interest rate that a lender or a financial company may charge on a commercial loan is prime plus 3% on floating rate, or the lender's residential mortgage rate plus 3% on fixed rate.
The Canada Small Business Financing Program also offers special benefits for women. As a Canadian woman, if you are interested in setting up your business, you can avail of a loan easily under this program. The pre-condition is that the business should be completely or at least 50% owned by a woman or women. Again, where you live will also make a difference for the program extends loans to only particular areas in Canada.
Canada Loans for Women
Canada loans for women include the Women Entrepreneur's Fund. Under this scheme, The Business Development Bank of Canada (BDC) has earmarked a $25 million fund to enable women entrepreneurs to seek new opportunities, or expand the existing ones in business areas such as food, health, software and manufacturing.
Then again, there is the AFER Program for Women in Rural Communities - Reseau des SADC du Quebec. As the name itself suggests, the program caters to the women who reside in the rural communities. For this, they can avail a business loan of $25,000 to cover start-up costs.
Canada Loans for Students
As a student, if you wish to attend a post-secondary education institution, you can raise the required funds under the Canada Students Loan Program, which is a special program designed to take of the demonstrated financial needs of the students. Before deciding on a loan, you need an estimate of the cost of your post-secondary education. The counselors in the colleges or university that you have in mind will be able to guide you regarding your loan requirements, and on issues such as saving, planning and paying your loan.
How Your Bad Credit History Hurts Your Chance Of Getting A Loan
Obtaining a loan or any type of finance can be a real challenge. If you have a bad credit history and you are trying to get a secured loan or buy a house, you will usually have to do even more work to find a lender that will be prepared to lend you the money. You will also have to pay a higher interest rate than someone with a clean credit history. What Is Credit History? Before you go looking for loan, it is crucial that you know more about your credit record. This is a recording of all your past financial commitments and contains information about your repayment reliability and the total amount of debt you are carrying. Lenders look at this record to determine your credit worthiness, usually by assigning you a credit score. The lower your credit score the less likely a lender is to grant you a loan. How Did Your Credit History Go Bad? Your credit history is an ongoing record of information about you and your finances, so anytime you miss a payment it is captured in the file. This is the same if you have ever defaulted on a debt or failed to fulfil a financial contract. Everything is captured in this record, missed mortgage payments, repossession, bankruptcy, CCJs, IVAs, credit card defaults, etc. Credit reference agencies collect other information about you, such as changes in employment or address. If your record shows that you make such changes frequently this will also lower your credit score. Will You Ever Qualify For A Loan? Generally speaking you will still be able to get a secured loan or mortgage, but there might be certain restrictions on your borrowing. Because of todays culture of debt there are an ever number of increasing lenders who specialise in loans for people with bad credit. Just keep in mind that you will probably be charged a higher interest and maybe offered a lower loan amount. The positive part of this is that once you have secured the loan you can start repairing your adverse credit history by making regular, payments on time. It will take a little time to improve your credit history, but it will happen. What Type Of Loan Can You Get? You have the option of going for a secured loan or unsecured loan. Unsecured loans are more difficult to get because you dont put up collateral as security for the loan. This is risky for the lender so expect them to require more stringent loan terms in this situation. Secured loans, on the other hand, require you to provide some form of asset as collateral. Most of the time this means you will secure the loan with your house. The amount of money you can borrow and the interest rate you will pay are influenced by your credit history, your total amount of debt, and your homes value. Different lenders weight these items different ways, so be sure to check with several to find one with a product suited for you. Where Do You Look For A Bad Credit Loan? Before you submit any loan enquiries, you need to research a number of different lenders and brokers. Find out about their interest rates, any special loan terms they may require, and any other specifics about their loan process. You can do all the research you want, but be careful not to submit a large number of loan enquiries over a short time period. This kind of activity can actually damage your credit history further. Generally if you have an adverse credit history the best way to source a good loan is to use an independent broker. Make sure that they are not tied to one lender but have access to a large panel. Find out what fees they will charge and what are the reasons for charging these fees. There are a large number of both secured and unsecured loan brokers in the UK, some are ethical others not so much, so make certain that you speak to as many as possible.
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