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  • 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.

  • Home equity loans: Everything you need to know

    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.

     

     

  • 7 Ways to Improve Your Chances of Getting Approved for a Personal Loan

    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.

  • Splitting the Risk: 5 Clever Ways to Store Your Money Without Having to Worry About Thieves

    Splitting the Risk: 5 Clever Ways to Store Your Money Without Having to Worry About Thieves

    It’s amazing how easy most things are today. If you want to buy anything, you can do it from the touchscreen on your phone with the click of a button. If you want to know how to solve a detailed math problem, you can ask Alexa or search Google. And if you want to steal someone’s identity, you just have to know how to hack into their personal information.

    Sadly, this happens all too often, making a lot of people gun shy about using the web at all for financial transactions, and making them nervous about keeping their money anywhere but in their own hands.

    It’s actually a smart move if you do it right, but you don’t have to stuff your cash under your mattress to store your money. Here are 5 clever ways you can stockpile your money without worrying about it being stolen.

    5 Clever Ways to Save Your Money and Avoid Thieves

    1. Find a creative place to store your cash. Leaving your money in a cookie jar, drawer, or under your mattress is just screaming for any would-be burglar to walk off with it. Instead, if you prefer keeping your cash on hand, find a place to store it that would take time and logic (neither of which most thieves have) to find.
    Some ideas are to use a freezer bag and store it behind all of your frozen food, in an old jacket pocket squeezed in with all of your other clothes, or inside a book stashed in your bookshelf.

    2. Make your home less of a target. Thieves can be pretty smart. They know which neighborhoods to canvas and when your garbage days are. With these two ideas in mind, potential burglars will head up and down streets to see who has recently purchased a hot new item and tossed the evidence in their trash cans.

    Avoid telling anyone who drives by that you just bought a brand new computer or state-of-the-art television by recycling the boxes at your local recycling dumpster or plant. Keep your curtains drawn if anyone who walks by can see the expensive furniture and electronics you have inside. In short, don’t make yourself a target if you are storing cash in your house.

    3. Avoid taking out big loans that leave you with a lot of cash on hand. If part of the reason you have this concern in the first place is that you need a lot of money for something, but you aren’t going to use it right Find a creative place to store your cash. Leaving your money in a cookie jar, drawer, or under your mattress is just screaming for any would-be burglar to walk off with it. Instead, if you prefer keeping your cash on hand, find a place to store it that would take time and logic (neither of which most thieves have) to find.away, consider your options in terms of loans.
    Instead of taking out a lump sum loan that leaves you with high monthly payments on money you haven’t even spent yet, you may be better off obtaining a line of credit rather than an installment loan. You can check out sites like loanreviewhq.com/ to see if you qualify and what the details are.

    4. Install a security camera. While a camera isn’t going to do much to keep your cash from disappearing if there is a really determined thief, it goes a long way in deterring most of them. Plus, effective security cameras may catch the person who broke into your home, and although you may not get your cash back, you will at least be able to put the perpetrator behind bars.
    Don’t keep all your eggs in one basket. In other words, don’t store all of your cash in one creative place. Instead of putting all of your money in the really cool book hiding place, split it up amongst multiple unique storage spots. The odds of a thief finding all of them is slim to none.

    Plan Ahead: Be Smart With Your Cash

    If you choose to keep your cash on hand because you want to outsmart the technology thieves, don’t become a target for normal, everyday burglars. Plan ahead and use these five strategies to keep your cash safe.

  • 7 Loan Options for People with Bad Credit Ratings

    7 Loan Options for People with Bad Credit Ratings

    Every day, so many people apply and get approved for both personal and business loans, however, a surprisingly large number of them gets rejected, as well. Most commonly, this is due to the bad credit score of the applicant that makes them into an unreliable investment prospect from the standpoint of the credit union. Unfortunately, developing a bad credit is not just something that happens as a result of negligence. A poor judgment, a small lapse in your schedule and even a lack of knowledge on this topic may lead you to develop a worse credit score than you deserve. Nonetheless, even in this scenario, all is not lost. Here are several loan options for people with bad credit ratings.

    1.      Secured loan

    The main reason why a person with a bad credit can’t get approved for a loan is due to the fact that a bank or a credit union doubts that they’ll return the borrowed money. This usually isn’t a problem with secured loans is due to the fact that they require a collateral instead. Getting a secured loan would require you to offer a valuable asset as a guarantee. Most commonly, it’s something like a property or a vehicle, while your investments may also be an option, in some cases. It’s also important mentioning that the repayment period of this loan is somewhat longer, which isn’t necessarily a good thing. A longer term means that you’ll be in debt longer, even though monthly payments will be somewhat lower.

    2.      A consolidation loan

    The next idea that you should consider is applying for a debt consolidation loan. In the introduction, we mentioned the phenomenon of having a bad credit score and this most commonly comes from a multitude of already existent loans. Things might get even worse, due to the fact that you’ll most likely have a problem to keep track of all the payment dates, interest rates and other factors revolving around these loans. Getting a debt consolidation loan can, therefore, resolve your short-term financial issues and help you manage your debt and your finances in a more efficient manner.

    3.      Loan from a personal acquaintance

    This particular idea is quite controversial, seeing as how it has some obvious positive and severely negative sides. On the positive side, a friend or a family member is not going to ask you about your credit score. Second, your previous reliability, in relation to them, might determine their willingness to lend you the money. The best of all is that you have the ultimate flexibility when it comes to agreeing on a payment plan. The problem is that you’re putting a relationship at risk. Aside from this, there’s only so much that your friends and family have to lend you, even with all the best intentions.

    4.      P2P lending

    Another viable option would be for you to go for a P2P (peer-to-peer) lending option. The benefit of this form of lending lies in the fact that there’s much less paperwork, even though some platforms have strict rules and qualification requirements, as well as the fact that your bad credit score won’t be a huge factor. The downside of this method lies in the fact that it might take a while until you receive the funds, while sometimes, you might be in a rush to get the money. Moreover, it’s highly unlikely that you’ll be able to receive all the funds you need from a single source, which means that you’ll have to look for multiple lenders.

    5.      HELOC

    The term HELOC stands for a home equity line of credit, which offers one an option to use the equity in the home that they have as a collateral for a loan. The advantage of this lies in the fact that you don’t have to own an entire home, seeing as how having a share of 20 percent in it may be more than enough. Another perk of going with this option lies in the fact that you get a lower rate (even lower than you would have with a credit card). On the downsides, once you’re done, you have to pay the closing costs and there’s always a small probability that the bank will cancel your line of credit. Most importantly, you’re putting your home on the line, which, although necessary, never feels quite right.

    6.      Bad credit loan

    It goes without saying that not all lenders abide by the same standards. Some companies are willing to be more lenient and grant loans even to those with not-so-shiny credit record. Of course, in this case, the terms under which you’re receiving the loan are not that great either, seeing as how the lender is also taking a greater risk. This usually means a somewhat higher interest rate, amongst other things.

    7.      Boosting your score

    Finally, if you’re not in that big of a rush, you could always set aside some time to boost your credit score. Pay off some of your debts, become more conscientious when it comes to due payments and work your way up towards boosting your rating. As we’ve already mentioned, if time is of the essence, this will not be a valid option, yet, it’s worth considering afterward either way.

    In conclusion

    At the end of the day, even though you do have options even with a bad credit rating, you shouldn’t neglect your credit score for too long. There’s a reason why this matters, seeing as how a future employer might check your score during the vetting process, which means that this will determine whether you get hired or not. Aside from this, your credit score might also play the role in your ability to get better terms for your insurance policy. Moreover, even though you have so many options with bad credit scores, with a decent one, you would have even more of them, which is alone a reason good enough to work a bit on this. Still, it’s more than reassuring knowing that not all is lost.