Posts Tagged ‘Spite’

• Getting the best mortgage loan with a bad credit

  Date: 2010.04.11 | Category: Mortgage | Response: 2

  For most people, applying for a mortgage loan to buy a house is one of the biggest and the toughest lifetime financial exercise. It gets even more difficult for those who have had a bad credit history. Even though people with bad credit are at a disadvantage, lenders do recognize their financial problems and needs and offer them mortgage deals that might not be the best but which at least provide them with an opportunity to own a home.

  In order to get the best possible mortgage options, a borrower has to impress upon a lender that in spite of a bad past, he is financially responsible. To convince the lender of your credibility, the foremost thing to do before applying for a mortgage loan is to start clearing the red flags that mark your credit report. Begin by reducing your credit card debts as much as possible. Similarly pay off other debts like car loans or auto debts, particularly if they have more than 9 monthly installments left, since auto debts with less than 9 payments are generally excluded from debt calculations.

  The next best thing to do is start saving big for a good size down payment on your home. Since you fall in the bad risk category for a lender, the bigger the down payment, the more it assures the lender of being able to recover his cash in the event of a future default. Do remember to include closing costs when saving for your down payment as they can add as much as 3% to the purchase price. Overall, saving more than 20% of the total purchase price should improve your credibility.

  The borrower should target and reduce his monthly liabilities to less than 50% of his total income in order to give confidence to the lender about his ability to repay his mortgage loan without any defaults. It is never to late to get into better financial habits, like reducing the use of credit cards and postponing large purchases. At this point of time, it is wise to hold on to your present job and not make any unnecessary jumps. A steady employment of over two years adds to your image as a consistent and stable person.

  Lenders will go through your bank statements to figure out your expenses and incomes. Any unusual entry may raise question marks. If a friend or family member gifts you money to help you purchase your house, make sure the lender know it is a gift and not another loan. Reveal all your liquid and cash reserves that you own since lenders judge your paying capacity from them and generally prefer that they have at least two months reserve of the monthly mortgage payments.

  Last but not the least, even factors like prompt payment of house rents, phone bills, insurance premiums and other financial bills add to your credit worthiness. Finally, even after you have spruced up your credit image, make sure to approach more than one lender and compare their lending terms and conditions in order to get the best mortgage loan.

• Flexible Mortgage UK Mortgages to Specially Suit the Self-employed

  Date: 2010.02.14 | Category: Mortgage | Response: 0

  Flexible Mortgage UK Mortgages to Specially Suit the Self-employed

  While a person drawing a fixed salary every month finds it easy to repay loan in fixed monthly instalments, those with a fluctuating income will find it otherwise. In order to tap the potential of the latter group, which principally consists of self employed people and people whose income is largely contributed by commissions, flexible mortgages have cropped up.

  A fluctuating income makes the case of these people inappropriate for regular mortgages because of two reasons. Firstly, lenders would not prefer a borrower with fluctuating income. Secondly, the borrower with such an income structure would himself find it difficult to make timely payments.

  Flexible repayments, payment as and when you like, and the option to repay the whole of the loan at the time you want, are some of the qualities that flexible mortgages in the UK are characterised with.

  Before you perceive this as the ultimate freedom, let us remind you that not all good things come for free. This aptly holds in case of flexible mortgages. The rate of interest charged on flexible mortgages is higher than the interest charged on the regular mortgages.

  In spite of a higher rate of interest, the popularity of flexible mortgages in the UK sees no decline. Until the time an alternative to flexible mortgage comes, self-employed people will continue using it. The advantages of flexible mortgages have overshadowed its drawbacks.

  Flexibility of repayments forms one of the most important advantages of flexible mortgages. As against the traditional mortgages where borrowers are required to pay a fixed instalment every month, flexible mortgages are easy on repayment rules. Consequently, in a month when the resources are not enough or when the borrower is incapable to make repayments at the normal rate because of loss, lesser repayments will be required. Similarly, when the borrower is in the capacity to pay more than what is required, he can make an overpayment. Paying less also means paying nothing. This is actually true though hard to believe. Payment holidays form one of the prime attractions of flexible mortgages. During a payment holiday the borrowers gets exemption from making payments altogether. The exemptions will depend on the borrowers regularity in the previous months and if sufficient balance of the loan has been overpaid.

  Next in the list of advantages, is the facility to draw as many times from the amount paid. Thus,

  Since there is a constant change in the balance that is remaining to be paid, charging interest annually or monthly would be costlier for the borrower. The third advantage of flexible mortgage deals with an ingenious way to lessen the interest burden. Interest in flexible mortgages is calculated daily. The daily calculation of interest ensures that periods in which the balance unpaid is less because of overpayment does not lose on the interest.

  The list of advantages does not end here. Premature settlement of accounts is a facility that is singly available in flexible mortgages. Unless otherwise stated, mortgagees will charge a premature payment penalty. Flexible mortgages, on the other hand, allow borrowers to repay the mortgage before it is due without any penalties. A borrower who wants to escape the high interest rate will find this clause in their favour. A loan taken to meet an occasional deficit in finance will be paid as soon as the borrower receives the necessary resources.

  Depending on the credit status a borrower enjoys, he will get flexible mortgages accordingly. The application procedure of the flexible mortgage is very similar to the regular loans and mortgages. Online applications and online processing helps in accelerating the pace of approval of flexible mortgages.

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