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Tag: Home loan

  • Want to Reduce Loan Burden and Debt Cleared!

    Want to Reduce Loan Burden and Debt Cleared!

    The burden could be of anything, it may be of depositing educational fees, conveyance charges, maintenance charges, marriage expenses, and bills of shopping various food items and luxury lifestyle, but the central part is how to overcome these debts.

    There can be many ways to repay debts. Some of the readers might be already familiar to them, but yet no initiatives have been taken. Some might be unfamiliar to those aspects and willing to know what can be best for them.

    Through this blog, I shall be trying to pull out the people from living concerns under the suppression of debts.

    I will bring them in light with the idea of behaving a personal opinion with the bright ideas of getting rid of debt traps.

    At last, we shall be discussing the idea of taking financial help if you are sued with CCJ type of forces.

    Ideas from a real-life incident

    We can get the idea of loan repayment with a real-life case study. I live in a society where we have the members almost around my age, and very few senior-aged people live there. I usually on a morning walk with my neighbours.

    A close neighbour, just living two floors above, frequently asked me about his debt life. He exclaimed that he is trapped in the debt trap and already seeks financial help from private lenders charging more and more interest. To repay a particular loan, I get to take a loan from another.

    His whole life has engulfed within the approach of beguiled conformity, and there is no way he is looking around to escape the situation. I got through the words he was expelling throughout the walk. He has three kids. The senior one is in college, and the two others are in school.

    He even lives with his parents and due to old age and must take responsibility on his own.  They also need sometimes medical facilities at home, and now he has a fear of even untouched from the full-day meal.

    Though he earns a handsome amount, he has taken a home loan, car loan, and some loan for his part-time business. The business is not getting much response from the customers, and now it has become a full liability in his life. This kind of problem we can generally see in every family.

    Getting the point

    I asked him a simple question in what sense, he looks at his own conditions. He replied calmly that he has to repay the instalments at every cost. But he had no idea what can be the right solution to this whole scenario. And the immediate solution was still hiding under the bed.

    I started making him clear with the modes of expressions and validating the experiences of mine. I acclaimed him with the modesties he needs to show in his life to make profound decisions to make it easy and reliable. All he needs to play with his income and expenditures.

    The first thing he should be cleared with is reconciling and full control over the things that can be easily manipulated according to his wishes.

    The things he can influence to have in his life or simply draw it from his life. So, he can go wither with direct controls, or he can influence.

    The direct control is in his hands just to control his expenses. The things that are going out of hands are with no efforts can be easily manipulated and confined with some attributions.

    I suggested to him about the easy goings with loans offered by direct lenders.

    Are you seeking financial support? Here what you can get!

    When you find yourself stuck in loan repayment issues and the lender sues you in county court then there are CCJ loans, offered by direct lenders in the UK.

    Not only in this case, but you may also really apply for loans at every time of need.

    Conclusion

    You can be debt-free entirely if you go with the experts’ common suggestions and come out with the formula of extending income sources and enforcing the control on making expenses.

    In this way, you can save much, and the saved money can be vested as instalments to get rid of debts.

    The consolidation of income and expenses should be treated in the well-behaved form under the consideration of making savings.

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

    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?

  • How is MCLR Calculated and Does it Make Home Loan Cheaper?

    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.

  • First-Time Home Buyers Guide: Buying With a New Job

    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.

  • How to Negotiate a better Home Loan Interest Rate

    How to Negotiate a better Home Loan Interest Rate

    Buying a home is one of the most important, and exciting, things you are ever going to do.  Buying a home can also be terrifying.  It could be the first time you are asking the bank for a mortgage and it could be the first time you need to start engaging with home loans.  There are several things you need to do when you negotiate a mortgage, and the first is to make sure you get the cheapest interest rate.  It’s all about communication, confidence and negotiation.

    Here are a few ways to ensure you get the best interest rate when applying for a home loan. 

    Ask for a lower interest rate.

    When you are dealing with a bank or lending institution, ask questions.  Ask exactly how home loans work and ask how to get a lower interest rate.  You are making a big investment in buying a home and you deserve to get the best possible deal.  If you don’t ask, you won’t get it.  Forget your shyness and do not let the bank or lending institution intimidate you.  Studies have shown that almost 40% of people who asked their bank for the cheapest interest rate actually got it.  Don’t be scared!

    It’s a good idea to shop around for your home loan

    When you apply for your home loan, do your research. Apply to the bank or lending institution that makes most sense to you and that appeals to you. It may come on somebody else’s recommendation or it may be someone you know.  Remember, there is no harm in shopping around.  If you are unable to negotiate a decent home loan with your bank, try another bank.  Some banks or loaning institutions specialise in home loans and you may find one is more open to negotiation than another.  If you are having a rough time with the institution you have chosen to work with, tell them you are going to the opposition.  That may be how to get a lower interest rate and they may just make you a better offer immediately.

    Talk about bank fees and monthly charges

    When you take out a home loan you are also going to be subjected to monthly bank fees.  Sometimes these are not discussed.  At the same time as negotiating your mortgage, ask about hidden fees.  The institution must be up-front about bank fees and you can ask them to lower them.  You will find that home loans are always widely advertised by the banks, but the banks never talk about the ‘hidden extras.’  Ask about any other costs that you may not have thought about, ask for a better interest rate, and always ask about monthly charges and bank fees.  Negotiate all of these fees – they all make a difference in the long run.

    Compare home loans online

    It’s important to do your own research on home loans.  You can spend a fair amount of time at the bank or lending institution, but you can also do your research online.  Look at the various options, check interest and lending rates and see who offers the best deals.  Remember, check out the hidden fees too.  If you think you are not getting the cheapest interest rate from your bank, ask another bank.  Compare all your figures before you make a decision.  Remember you deserve to have the better interest rate and there is no harm in asking for it.

    Be sure in your decision

    When you do make a decision about your mortgage, be sure about it.  Switching from one bank or institution to another can be a costly exercise.  You want to make sure you are getting the best possible deal from the beginning.  Spend time doing your research, check on all the fees and charges, know that you are getting the cheapest interest rate, negotiate as much as you can, and then sign on the dotted line. You do not want to have any regret afterwards – it will cost you too much money.  Home loans are big business for the banks and lending institutions and they will want your business.  Make sure they look after you and remember, you are entitled to a better interest rate.

    Communication is key

    Buying a new home is a big deal and applying for a mortgage is a big deal. Unless you are in a huge hurry, take your time with negotiations.  Make a list of all the questions you have for your bank, and tick them off as you get answers.  Do your research and chat to people about the interest rates that they are paying.  Compare interest rates at the different banks.  Ask your bank about all the hidden costs and don’t forget to ask about monthly fees.  Also, ask about changes in interest rates.  You don’t want to sign up for one rate and find out a month later that it has jumped by a few percent.  That is why you want the cheapest interest rate from the very beginning.  Talking, doing your research, asking questions and communicating with your bank is how to get a lower interest rate.  Home loans can be tricky to deal with.  You want a bank, or lending institution, that will guide you all the way.

    Trust your instinct

    Our last point is a salient one.  You want a bank or lending institution that you feel comfortable with. Imagine if you don’t have to beg for the cheapest interest rate! Imagine if you are offered the better interest rate from the very beginning.  That would be the most ideal situation.  Home loans can be stressful and the best bank or institution is the one that helps you, offers you advice and genuinely has your best interests at heart.  Sure, you may still have to negotiate a little, and yes you must always ask for the better interest rate, but go with the money lenders that make you feel good, secure and confident in the decisions you are making.

    Author’s bio:

    Biljana is Digital Marketing Manager for BestFind. BestFind is an Australian comparison website for personal and business financial products. We make it our mission and goal to provide the simple, comprehensive and transparent data for financial products from many of Australia’s financial institutions.

  • Tips To Get The Best Home Loan Deal

    Tips To Get The Best Home Loan Deal

    The process of applying for a home loan may seem scary if you get into it unprepared, but if you have braced yourself up in advance and follow the required steps then it may sound easy to get your home loan application approved.

    Well, applying for the loan in a right way is not all that is needed. You are also required to act smart and apply for a home loan deal that suits you best.

    Under this article, we will talk about the tips that will help you lock the best home loan deal for yourself.

    So, before you apply for a home loan, take into consideration these key tips:

    Negotiate Rate Of Interest

    Those who lend the money usually define the rate of interest in a minimum or maximum range and the actual rate they charge depends on your eligibility criterion. Being a borrower, you have the advantage to negotiate a better rate of interest.

    According to financial advisers, you can do this not only by comparing the loan options available for you but also by improving your chances of becoming eligible by adding a co-borrower and combining the income of the co-borrower with your own.

    Go For A Loan Only After Comparing

    Before you choose to buy any particular loan, indulge in an intensive research work and compare all the options of the different types of loans available in the market. Know about the equated monthly instalments, available interest rates, processing fee, and other related charges.

    The emergence and development of technology have made the process of comparing much easier for you. Now you can compare between different types of loans available by accessing the internet at the ease of your comfort zone.

    So, always look at the base rate, margin offered, maximum tenure offered, how eligibility is calculated and most importantly if the lender has earlier funded the property similar to yours.

    Rate Of Interest

    Home loans are available in return for the rate of interest. So, before applying for a loan always finds out the type of rate of interest you will be required to pay.

    If a home loan is based on the fixed rate of interest then the interest rate will not change during the entire loan tenure and the borrower is required to pay the same EMI throughout the loan term.

    Under the floating rate, bank loans are linked to the MCLR whose rate of interest automatically changes after a fixed period of time.

    If the interest rate is expected to fall in the near future then you should go for floating rate and if it is expected to rise in near future then you should opt for a fixed rate loan.

    You can pre-close the loan ahead of its actual tenure. If your loan is based on a floating rate, no charges will be applicable but if you are on a fixed rate loan, there may be charges applicable.

    Know Your Borrowing Capacity

    Most of the time people decide to pay high EMIs thinking that the loan amount will come down with time due to increase in their income. It is important to understand that this does not happen all the time. Your income may or may not increase with time. Therefore, understand your borrowing capacity and borrow under your limit where paying the EMIs will not stretch your finances.

    Additional Costs

    When you decide to apply for and take a home loan, never forget that interest is not the only cost which you have to bear. There are certainly other costs too.

    Each time you apply for a loan with a bank or any other non-banking financial institution you are charged a certain percentage of the loan amount that you wish to borrow. The percentage charged is known as the processing fee. This amount may vary from 0.5 percent to 1 percent of your total amount of loan.

    Banks or NBFCs also charge legal fees to ascertain the legal status of the property. Usually, the legal fees are applicable on either a loan against property or on a home loan.

    In fact, depending on the type of loan you wish to borrow, you will be charged a fixed amount for the pre-payment of your loan. In case you do not repay your loan EMIs on time, a late payment fee is charged. The late payment fee depends on the financial institution that has lent you the money and the type of loan you have borrowed.

    Ankita is a freelance writer who writes about finance, loans, credit cards and insurance.