Home Loan

You have finally purchased a home of your own. For so many years it seemed to be like a dream always just a little out of reach. What happens next? You do not need to be shackled to your home loan for 25 or 30 years. Here are some useful tips to help you pay off your mortgage sooner and achieve “true home ownership”.

Avoid Honeymoon Offers

Many lenders use introductory or honeymoon rates as marketing tools to attract new borrowers. You are initially offered a cheap rate on your loan to get you in the door but once the honeymoon period is over, the lender will switch you to a higher variable rate of interest.

To understand the true interest rate you end up paying with a honeymoon product - look at the advertised comparison rate on such a loan. Invariably you pay less today but more in the long run.

Pay more to get ahead

It is a very simple concept to grasp - the more you pay off your mortgage every month the faster you will pay off your loan. Most people think in terms of making sure they pay just enough to cover their set repayments. By doing this you will keep your mortgage for the full loan term of 25 or 30 years. The key to paying your loan off faster is to make as many ‘extra’ repayments as you possibly can.

Increase the frequency of your repayments

One of the simplest and best strategies for reducing the term and cost of your loan (and thus your exposure should interest rates rise) is to make your repayment on a fortnightly rather than monthly basis. By splitting your monthly repayment into fortnightly you will effectively be repaying the same annual amount but your outstanding loan balance will reduce faster.

Amazingly enough, this change can cut thousands of dollars and years off your mortgage.

The reason for this is that there are 26 fortnights in a year, but only 12 months. Paying fortnightly means that you will be effectively making 13 monthly payments every year. And this can make a big difference.
Have you considered a professional package?

Most lenders offer a range of professional packages to clients who are prepared to pay a small monthly fee. These packages offer a reduction to the standard variable interest rate, can come with a cheaper home insurance, fee-free credit cards and a number of other options.

Consolidate and save

If on top of your home loan you also have other outstanding loans such as a personal loan, credit cards, car loans etc. - by consolidating all your other outstanding loans into your mortgage you can generally significantly reduce your overall loan obligations and hence have more funds available to apply to your mortgage.

Many lenders will allow you to re-finance - your other debt under the umbrella of your home loan. This means that instead of paying 15 to 20 per cent on your credit card or personal loan, you can transfer these debts to your home loan and pay it off at a home loan rate.
Utilize your available equity

Home equity is the difference between the current value of your property and the amount you owe the lender. For example, if you have a property worth $500,000 on which you owe $200,000, you are said to have home equity of $300,000. In most cases you should be able to establish a line of credit or a home equity loan to access these funds.

Generally lenders will allow you to borrow up to about 80 per cent of the loan-to-value ratio (LVR) of your available equity. You can use this equity to help to pay off your home loan sooner.

You can use your home loan equity as a deposit towards property investment. Over time both properties will grow in value. Eventually you will be able to sell one and pay off the mortgage over the other.
Spend less on lifestyle

We are not suggesting that you eat less or buy nothing other than absolute necessities. However if you have a goal to pay off your mortgage as soon as possible you do need to watch lifestyle expenditure. Spending less on cars, holidays, and going out can help you save more towards your mortgage. If you focus on doing this for at least the first 2-3 years of your loan - there will be a marked difference in your financial position for years to come.

Make sure your loan is portable

Although you may believe today that you will live in your home for many years to come - things change. It is prudent when looking for a new home loan to obtain one that is portable. A portable home loan can be transferred to a different property saving you extra loan set up fees.
Stay away from bridging finance

Bridging finance is a temporary loan available from most lenders which allows you to settle on the purchase of one home while waiting to sell another.

It often happens that you see a house you like more than your own. You know you can afford it. It is a bargain. All you have to do is sell your home first. So you sign a purchase contract and then put your property on the market. That is when things start going wrong.interest rate goes upmarket is slow..you know your house is worth more than the best offer you have received to date. You decide to wait but also need funds to settle on the new purchase. All the savings you have made on the purchase of your new home will go down thew drain in a matter of days as a result of a bridging loan. Theses loans are very expensive and best to be avoided.
Our advise is simple - If you need to sell, do not buy before you sell.
Is the loan right for you?

Choosing a loan is about knowing what you want. You only want to pay for the loan features that you need. If you only need a bicycle, don’t buy a motor car.

Different loans have different purposes so you must match a potential mortgage to your needs. Taking out an interest only loan is great for investors but if you are looking to live in the home and pay it off quickly, principle and interest is best.

Dropping the features you don’t need can save you up to 1 per cent on the interest rate of your loan. Over 25 years that’s a lot of money.
Consider non bank lenders

As recently as 10 - 15 years ago most people had their mortgage with one of the major banks.

Since the advent of the mortgage managers, there’s been a lot of talk about smaller and “non-traditional lenders” offering very competitive home loans at low rates.

We are always puzzled by borrowers who worry about getting their mortgage through an entity who is not a household name. Why worry - it is you who have their money, not the other way around. If the terms of the loan are good and the rate is cheap - we say go for it.

If you would like to learn more about getting a great home loan and paying it off faster please visit

www.webdeal.com.au or

www.honeyloans.com.au

Maya Pavlovski holds a Bachelor of Commerce degree from Melbourne University and is a qualified CPA

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One of the most unforgiving challenges that bad credit leaves you with is that it prevents you from having your own house. It always keeps you away from making true your dream of owning a house. Well, today it’s not the scene actually. There are a lot of people with adverse credit who want to buy new homes, and to fulfill their desires, the financial market has come up with bad credit home loans.

Bad credit home loans are loans that are especially offered to people having bad credit. If you want to buy a house, this loan will help you out without any worry of your credit history. If you think you might face difficulty in repaying huge loan amounts, you can this loan can help you by offering low rate loans with easy repayment terms, so that you can make timely payments and improve your credit score.

With bad credit you will have to pay up to 20% of the amount at down payment. But if your financial circumstances are favourable you can get up to100% financing. If you are a first time buyer, you should follow on very carefully. Be well researched beforehand about the loan and look for as many lenders as possible. If you are still doubtful about your qualifications, you should first of all get a pre approved home loan before making any commitment to the lender. This will identify your credit problems, reveal how much money you can really afford, and it will prove to lenders that you are serious about buying. This way you can get ready and qualify yourself for the loan.

In order to avail bad credit home loans, you first of all need to find a suitable lender for you. This you can do easily with the help of the internet where you will come across a huge variety of lenders with their distinctive rates and fees. You can catch hold of the best lender offering home loans that will go well with your credit conditions.
The next step towards getting a home loan is to fill the online application form. This form will ask you about certain details about your personal and financial history and most importantly, your credit score.

Bad credit home loan is mostly a secured loan as the house for which you are taking the loan is automatically kept as a security with the lender. However if you wish to get a loan for other purpose and want an unsecured loan you can also avail that.

Bad credit home loans can help you serve your varied purposes. You can make use of this loan for different purposes and not necessarily buying a home. You can use the loan amount for holidaying, to buy a new car, to pay existing debts, and even for debt consolidation. Thus bad credit home loans serve as a multipurpose loan that would no only help you get your dream home but also meet other necessities.

Peter Taylor is a senior financial analyst at BadCreditLoans with an acumen for finance and insurance.
In recent years he has taken up to provide independant financial advice through his informative articles. His articles are widely read because of the lucid manner of writing and thoroughly researched datas. To find Bad credit loans, Bad credit home loan, Bad credit personal loans, Bad credit auto loans UK that best suits your need visit http://www.badcreditloans.uk.com

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Getting a 30 year home loan used to be a popular choice among most home owners. The reason being the total home loan payment is being spread out across a longer time period so you can pay less each month. Plus with interest rates fixed for the 30-year period, it seems a good deal. Or is it?

The one big benefit of a 30-year home loan is that you pay lower monthly payments however, you need to take into consideration that you actually pay more in interest than someone who has a 10-year home loan. So the longer the home loan period, the more you actually pay.

To illustrate the difference the home loan period makes, here is an example. Let’s say for a 30-year home loan, the interest rate is 7%. The home loan is $100,000. That’s means your monthly payment is about $665.00. It also means the interest paid for the 30 years is around $140,000. Now suppose for a 15-year home loan with the same interest and total home loan amount. The monthly payment is around $870.00 and the total interest over 15 years is around $56,800.

So by opting for the 15-year home loan, you actually save $83,200 in total.

A longer home loan period does offers you more flexibility in that if your financial situation were to take a turn for the worse, for example, you just lost your job and jobless for the past few months. A lower monthly home loan payment helps to alleviate some of the financial problems.

So which is better? The longer or shorter home loan plan? My recommendation is if you have the financial knowledge and your financial situation is stable, it would be a good choice to take the 30-year loan and invest the savings otherwise pay towards the monthly payments. The long term payoff of your investment may match or exceeds the money you go towards repaying your home loan.

On the other hand, if you do not have the financial stability and knowledge, I would recommend for a shorter home loan. Yes, you do pay more each month but overall you will pay less for the home loan plan. Also you get to accrue equity in your home much faster which can be used to improve your credit score or FICO.

While a 30-year or even a 40-year home loan sounds attractive to most home buyers, there are some questions that needs to be answered before getting one. It is my hope that this article can help to educate home buyers some of the points that needs to be considered seriously before choosing the home loan period.

Ricky Lim works in a finance company specialising in home loan consulting. Get more information, tools and resources on home loans, visit his site: http://about-homeloan.com

He also operates a student loan information site

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