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6 Things to Think About When Taking Your First Step onto the Property Ladder

Buying your own home is a huge milestone in your personal life. Not only will it free you from having to pay rent, it will also provide you with a valuable asset you can sell on demand and make money from. Still, such decisions are not to be rushed by any means; after all, you’re making a substantial financial investment here. To ensure that everything runs smoothly, please make the following considerations before attempting to climb the property ladder:

1.Borrowing money from your parents
The fact of the matter is that you’re going to need a significant amount of money to cover the investment. If taking out a Home Loan straight off the bat isn’t quite to your liking, there’s an alternative – borrowing money from your parents. Without a shred of doubt, your parents will give you better terms than any commercial lender, including very low interest rates. More often than not, they will be rather lenient on you in case you have trouble paying it back during certain months.

2.Calculating your costs
Online calculators are a great way to figure out your monthly and overall costs. By using a Home Loan Emi Calculator, you will know exactly where you stand in terms of paying it back, allowing you to plan your personal finances in advance. In other words, these calculators will let you figure out whether you can afford taking out a loan in the first place.

3.Checking out various regions
As a general rule of thumb, the central city regions are the most expensive ones, while the countryside is much more affordable. As a trade-off, by choosing to live the country life, you’ll be much farther away from important city buildings, which means it’s going to take more time to get things done. But if you’re willing to live with that, checking out the countryside and other regions in your country is a good way to save a great deal of money on your investment.

Getting your spending habits under control
If you’ve been recklessly spending throughout your entire life, now is the time to rethink yours pending habits. If you’re constantly finding yourself making purchases on impulse or engage in a shopping spree over the course of a weekend, just think about how much money you’d save that could be better spent on other things. It could very well make the difference between being able to afford a new home or not.

Taking shortcuts may not be the answer
Understandably, you’re looking for ways to get onto the property ladder as soon as possible. To that end, you’re likely to take some shortcuts in order to reach that goal. But just think about it… is buying a tiny one-bed apartment truly a worthwhile investment, given that you may start a family soon and outgrow it before you know it?

Being prepared for scrutiny
Lenders typically look for indicators why someone may or may not be a suitable candidate for a loan. Therefore, it’s crucial that you portray yourself as someone who’s financially stable. If you have something suspicious on your financial records or transactions, try to come up with a reasonable and believable way to explain it.

Conclusion

These are the bare essentials to consider when taking your first step onto the property ladder. While there are others, they’re well beyond the scope of this article. Equipped with the knowledge you need to make a rational buying decision, are you ready to become a homeowner?

April 16, 2019
How is MCLR Calculated and Does it Make Home Loan Cheaper?
Living under your own roof or home offers a place to dwell and buying a home also comes with other benefits such as the value of the property appreciates with time. Many of us avail home loans to build or buy that home that you have always wanted. Home loans have become cheaper in recent times, thanks to a drop in the interest rate.

One of the reasons why home loan interest rates are declining is because the change base rate to the Marginal Cost of Funds based Lending Rate (MCLR) has led to the fall in interest rates on housing loans. This new method was introduced by the Reserve Bank of India (RBI) from 1 April 2016, under which all banks in India follow or lend loans based on the MCLRs.

MCLR Meaning

MCLR refers to the minimum interest rate of a bank below which it cannot extend a loan. This rate is an internal benchmark for the bank. It describes the method by which the bank calculates the interest rate offered to an applicant. This is based on the marginal cost of funds, tenor premium, the cost to maintain the cash reserve ration and other operating costs.

To understand MCLR better, it’s essential to understand what the base rate on the home loan is, which was in place before MCLR was introduced. The base rate is the minimum interest rate a bank levies a customer who wants a loan. No bank can offer loans below the base rate.

Since banks shifted from base rate to MCLR from April 2016, the latter has become the benchmark lending rate at which banks offer loans. With the MCLR much lower than the base rate, home loans have become cheaper.

How is MCLR Calculated?

To learn how MCLR is calculated, you need to understand what marginal cost of funds, tenor premium, costs of maintaining cash reserve ratio and operating costs.
- Marginal cost of funds: Sometimes banks borrow funds to meet their business expenses and pay interest on these funds is known as the cost of funds. Marginal cost is the additional expenses banks incur to fund investments or an asset.
- Tenor Premium:it’s the amount of time left to repay the loan. Various loans have several tenures or time periods. If the bank, under MCLR, extends a loan with a higher tenor, then there’s a lot of risks involved. To make up for the risk, banks charge a tenor premium.
- Cost of Maintaining the Cash Reserve Ratio: Banks, as per RBI guidelines, must maintain a certain percentage of their total deposits with RBI in current accounts. This percentage of deposits is called Cash Reserve Ratio (CRR).
- Operating Expenses or Costs:Apart from the services charges, banks incur expenses in extending the loan to you. These expenses are known as Operating Costs or Expenses.
So, Does MCLR Make Home Loan Cheaper?

MCLR is offered in six or one-year options, which are the benchmark rate on floating interest rate loans. If you choose a one-year MCLR, then your home loan rates will be revised every year. Banks are extending home loans at lower floating interest rates and now is the time to switch or choose an MCLR based home loan. It may be noted that you need to consider the costs of loan transfer if you are transferring your home loan from a fixed rate to a floating interest rate.

However, do watch out after moving to MCLR based loans, there’s always the risk of an incline in the movement of the interest rate before you reach the revision period. If the RBI hikes the repo rate, the rate at which it lends money to banks, MCLR too will increase accordingly. Also, ensure that under the MCLR based home loan, you have the option to pre-close or part pay the loan amount or transferring the loan to another lender does not attract heavy penalties.

MCLR does make home loan cheaper if interest rates are declining. So, take the right decision which suits your requirement and not go by what the market reflects about MCLR.
March 26, 2019
Home equity loans: Everything you need to know
There are many types of loans and credits marketed by banks, but one of the most specific for its special characteristics is the equity loans. Its popularity in recent years has been due to the lack of financing to individuals as a result of the economic crisis generated since 2008. This type of loan is based on a property free of charge or with reduced debt is provided as collateral to the operation in order to access the line of credit that, otherwise, you could not get.

The loans with mortgage guarantee is a type of loan in which a property is contributed like guarantee of the operation. Additionally, the financial institution will analyze your economic situation to assess if they grant you the loan. So it will be essential to show income, official or not, with which to face the monthly installments

Loans with mortgage guarantee: interest rate, term and financing
1. Financing time: The loans with mortgage guarantee grant a maximum amount of 30-40% of the real value of the property
1. Repayment period:In a term loan with mortgage guarantee you will usually have between 12 and 180 months to repay the loan depending on the amount required. However, in these credits the negotiation with the lender is very frequent and in this way you can extend the deadlines to adjust to your personal needs.
1. Interest rates: In terms of Interest rates you can be more demanding than a personal loan. Due to the lower requirements that your concession requires, the cost of these products is somewhat higher than in traditional credits.
Bonding loans with mortgage collateral

The loans with mortgage guarantee do not have any type of connections. You will not have to contract other products with your financial institution such as payroll, insurance or bank accounts.

Mortgage loans for various purposes

The mortgage loan can be used to finance a new business, cancel an outstanding debt, and make reforms in your home or premises or simply to obtain liquidity. All you have to do is indicate in the loan contract what you want to use it for.However, home equity loans cannot be used to purchase a home.

More flexible requirements in your concession

Regardless of the guarantee of your apartment or apartment, the conditions for accessing mortgage-backed loans are softer than in the other financing models. Of course, you must show some income, official or not, with which to pay the loan installments.

But what most characterizes the loans with mortgage guarantee, is that they are open to all user profiles: self-employed, pensioners, employees, temporary workers and others

Faster processing

Your concession will be faster because you will have to go through fewer administrative procedures than in other financing models. Without being included in the category of quick credits, you will be sure that in a few days you will have the amount requested in your checking account. The crediting companies often carry out a free study without compromise of your situation and they will give you an answer to your request in a maximum of 24 hours.

Why to apply for a mortgage loan?

The key to home equity loans or mortgage loan is that the requirements for their concession are more flexible than in the case of traditional personal loans. For example, it does not matter if the applicant is included in an ASNEF or RAI file, or that you have other loans contracted. In return, you will have to endorse the operation with a real estate property that would be put at risk if it were not possible to face the payments. It is a risk that you have to run to enter the financing market if you do not meet the requirements that banks impose for a personal loan. In short, your access is more open to your customer profile, but with greater risk in the operation for your assets.

In many cases it is the last resort you have when financial institutions deny you other types of loans. The profiles that usually request these types of loans are self-employed, pensioners, workers with non-regular income or who are or have been in the past.

Conclusion: Be careful when borrowing money against your home as part of an investment strategy. There is no such thing as a “guaranteed” or “risk free” investment. Avoid companies that ask for large commissions in advance, or make unrealistic promises, such as restoring your credit or canceling your debts, paying just a few cents for every dollar.You should carefully consider all your options before making a loan against your home, in order to make an investment. All investments can lose value and that could put your home at risk, if later you cannot pay the loan.
March 8, 2019
Peer Lending Popular in Singapore

In the event that your business needs capital (working), or you’re hoping to expand your speculation portfolio, the following are fundamental P2P loaning stages for you to review:

1. Capital Match Singapore

2. Subsidizing Societies

3. Minterest

4. MoolahSense

5. CoAssets

Do take note of that these loaning stages just give SME advances at the season of composing (2019/January). All the referenced stages are additionally controlled by MAS (the Monetary Authority of Singapore).

How does shared loaning work, and would it be right for you?

Distributed (P2P), or friend to-organization (P2C) suppliers don’t coordinate individual moneylenders straightforwardly with a loaner. Or maybe, they empower the bank to put resources into an arrangement of purchaser advances. At the end of the day, the P2P supplier encourages a stage where speculators can fund an arrangement of advances and acquire enthusiasm on what they loan, while loaner is given a special rate dependent on their FICO assessment and different elements. Borrowers. To acquire, you present your proposal to the P2P moneylender.

The supplier at that point assesses your qualification for a distributed advance by confirming your personality, record of loan repayment, work or financials. He will evaluate the danger of the credit and give you a customized loan cost. After endorsement, your credit will be subsidized by a few financial specialists. The loan supplier will, for the most part, cut an initial charge from the sum exchanged. Financial Specialists. Potential financial specialists audit the accessible proposals on the site and recognize the person they might want to support.

How are distributed advances changing the Singaporean money related scene?

Given the simplicity with which numerous individuals – speculators and loaner – can verify credits at ideal terms by means of P2P loaning, plainly these suppliers are digging in for the long haul. The shared business is looking at a major potential market. Its comfort and aggressive loan fees improve its intrigue in contrast with standard monetary foundations.This is likewise the main acquiring stage to open the ways to littler financial specialists searching for good and secure returns (progressively).

February 14, 2019
First-Time Home Buyers Guide: Buying With a New Job

Ideally, when you’re ready to buy your first home, you’ll have been working a great job for a few years, have a promotion within the company on the not-so-distant horizon, and will feel confident, stable, and ready for growth in your career as well as in your new home. Unfortunately, life doesn’t always work that way. Sometimes, the best job opportunities arise at the worst possible times, such as while you’re house hunting.

If you’ve already accepted that new job, will you need to build up your employment history all over again? Will you really need to wait a few more years to buy your first home? Not necessarily.

What Employment Factors Do Lenders Consider?

Lenders typically prefer a solid employment history of at least two years with the same company. While it’s true that the underwriter of your loan will verify the employment history you provide – including dates, title, likelihood of continued employment, and income – and will raise a red flag if it appears things have changed since you submitted the information, there’s more to be considered than the two-year time frame.

An underwriter will request you to provide at least two years of work history, and will use that information to determine your income. Whether you have a salary, hourly wage, commission, or some combination of the two, the underwriter will calculate your average monthly income to determine how much mortgage you can afford. A job change, negative wage change, or gap in employment history can raise a red flag when it comes to ensuring you have adequate income for a mortgage.

What if You’re a First-Time Home Buyer With a New Job?

First, you’ll need to consider whether your new job makes financial sense. If your move seems risky, such as a transition to a completely new career field or a potentially unstable new employer, your new job could negatively affect your ability to get a loan. If you are moving in a positive direction to a job offering a higher salary or more benefits, the underwriter will not usually see much of a problem.

Keep in mind that lateral moves with the same pay should be to a higher-quality company or a company providing more benefits. Lateral moves without a pay increase can make it seem like you’re an unstable employee without a steady source of employment. If you’ve made a lateral move for some other reason – a job that won’t require an hours-long commute, doesn’t rely on commission, or some other stabilizing feature – the underwriter can consider these factors.

What if You’ve Received a Job Offer?

If you’ve received a job offer but are still with your original employer, you may want to consider making the actual change after the home loan process. Keep in mind, however, that if you are pre-approved with your original income, your best bet is to continue with your original employment until the buying process is complete. Since purchasing a home can take as many as 60 days from start to finish, you may want to consider other options.

If you have an offer letter in hand from your new job, and that job is a positive career or lifestyle move as described above, your lender may consider an offer letter mortgage. An official offer letter from your new employer should detail the position, the terms of your employment, start date, salary, and signatures from both parties. Your lender is essentially looking for proof that you will maintain steady for the next three years, and an offer letter can provide such proof. You won’t receive the funds until your first pay stub from the new job, however.

What if You’re a New Graduate?

Recent college graduates may not have the steady employment history usually required of first-time home buyers, but education is often reason enough for lack of steady employment. If you are moving right from college into your chosen career field, most lenders will not see a problem. However, if you’ve had a significant time gap between graduation and your first job, or if your job is not related to your degree, an underwriter will likely raise a red flag.

What if You’re Moving?

Many people move while in the process of beginning a new job. If you’re moving to Seattle, for instance, from some other location in Washington state, your lender will need to balance the cost of homes in the area with your new income. In addition, you’ll likely need to prove you have sufficient cash reserves or employee moving benefits from your new job to handle a move. Finally, the loan must usually close within 60 days of beginning your new job, and you’ll need a pay stub to receive the funds.

Beginning a new job doesn’t have to be a black mark on your employment history, especially if you’re a first-time home buyer that qualifies for the multiple first-time home buyer programs. As long as the job change is a positive financial move and you have the required credit history, your home buying adventure should continue without a hitch.

About the Author:
Information is provided by Sammamish Mortgage, a Premiere Mortgage Company in Pacific Northwest including WA, ID, OR, CO.

February 13, 2019
7 Ways to Improve Your Chances of Getting Approved for a Personal Loan

Even the most financially responsible New Zealand residents sometimes need to borrow emergency cash. Medical bills, household repairs, and vehicle breakdowns may create expenses that drain your savings account. In many cases, a personal loan can help. It is a popular option offered by a variety of businesses. Each business has its own approval process and it is easier to qualify for some than others. However, there are steps you can take to improve your chances of getting the funds you need.

1. Understand Lenders’ Credit Requirements

Your credit standing is the most important factor for many lenders. Each company has its own minimum requirements. Conservative lenders like banks often want higher scores than loan companies. Lenders research your credit background to determine whether you manage your money responsibly will be able to repay your loan. The amount you owe affects your credit since large debts impact credit scores. However, some lenders will approve a new loan even if you have several outstanding debts because not all borrowing has a negative impact. An article at Forbes.com explains how a loan may actually improve your standing.

2. Make Sure You Meet Employment Conditions

Most lenders expect customers to verify employment, but requirements can vary. Many businesses accept nearly any verifiable income source while others reject child support, freelance income, or benefits.

3. Find Out Whether Your Loan Purpose Will Be Approved

Many companies loan money without asking clients what it will be used for. Others prohibit clients from using funds for things like business expenses or secondary education. It is wise to find out lenders’ policies before applying.

4. Understand All Income Requirements

Your income may be the single most important factor in determining whether you get emergency cash. Every lender has a minimum requirement and some businesses focus primarily on income. Many companies also factor in how much debt you have compared to your income. This is known as the debt to income ratio and the percentage required for approval can vary from lender to lender. For instance, New Zealand lender GE Money considers a 36% debt to income ratio good.

5. Determine Whether Collateral Is Required

Depending on the amount of money you need, a lender may ask for collateral. It is rare for companies making small personal loans have this requirement. Those that make larger loans typically want to defray their risk. They usually require collateral like property or liquid assets.

6. Consider a Variety of Lenders

Your current financial situation will determine what type of lender is most likely to approve your application. Banks are usually the best option for those who are employed, have healthy incomes, and enjoy good credit ratings. Clients with financial difficulties will be more successful in getting a personal loan from lenders that do not check credit and have more relaxed requirements.

7. Check the Details Before Applying

It might seem obvious, but you need to double check the details of your application before submitting it. A small error can disqualify you unnecessarily.

New Zealand residents who need emergency cash can get personal loans from a variety of lenders. They have a good chance of approval if they meet lenders’ requirements for credit, employment, income, collateral, and borrowing purpose. It is also important for applications to be correct, to avoid unnecessary rejections caused by errors.

December 25, 2018