Tag: mortgage repayment

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Home Loans

What Happens When You Default On Home Equity Loans?

Default On Home Equity Loans

If the value of your home, or the amount you paid for it, is higher than your first mortgage or the principal, it means that you have equity in your home. You can tap into your equity by applying for a loan, secured by it. These can be a great option to acquire finance, but what happens if you default on home equity loans?

Here are the consequences if you default on home equity loans

1.The account will be sold to a collection company.

Unlike what other people think, foreclosure is usually not the course of action home lenders choose to recover the amount you owe. When you default on your debt, your lender may sell it to a collection company who will take it from there. They will call you, send collectors to your door steps or send demand letters to attempt to recover your outstanding balance.

standard-lawsuit2. Standard lawsuit

If the second mortgage holder decides not to foreclose, can it still recover the money it has lent you? Yes. In an attempt to recover payments, the lender may file a standard suit against you. It is less scary than a foreclosure where you will lose ownership of your home, but it can seriously hurt your credit score.

3. Foreclosure

In case of default, the holder of your second mortgage may initiate a foreclosure to recover the money it lent to you the moment your house is sold at a foreclosure sale. Since mortgage is a senior lien which takes priority over a home equity like a second mortgage (because the loan was registered earlier) the first lender gets paid first. But, what if you refinanced the loan—does it mean that the second mortgage lender becomes the first priority? It depends. Whichever lender has the certificate of title will be entitled for the payout first. If you were in the process of refinancing but it was never complete before the foreclosure on the property and you didn’t pay the previous lender out, they are not eligible for the funds. If your previous lender still holds the certificate of title, then they are the ones who need to be paid out.

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Here are tips to avoid the above-mentioned consequences of not paying your home loan on time…

Don’t hide from your creditors.

They will not be so enthusiastic in working with someone who avoids their calls, ignores their letters and refuse to cooperate with their offer to help for a few months. Remember that most mortgage lenders will work with borrowers who are struggling to make payments to encourage payment. So, if you’re missing payments, contact your lender right away. Inform them about your current financial situation and express your willingness to work out a repayment plan suited to your condition. Your lender may modify the terms of your loan, lower or raise the interest rate, increase or decrease the monthly payments, depending on your situation and financial capacity. It can also be a combination of the abovementioned options to make the home loan more affordable.

Explore available options to avoid foreclosure

Are you struggling to make your second mortgage payments? If foreclosure is imminent because of default, check out some of the alternatives to foreclosure that Australian Lending Centre offers:

If you want to consolidate your debts into 1 easy-to-pay, low-rate loan with low monthly repayments, get your finances back into order with a debt consolidation loan. Learn more about home equity loans and the suitable financial solutions available for you by calling 1300 138 188 today!

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Mortgage Financial Fitness Financial Planning Home Loans

Will My Car Loan Affect My Mortgage Application?

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A car loan can help you a lot if you plan to get your next car faster. However, a car loan can affect your mortgage application or other types of significant loans. If you are planning to buy an expensive car, this means that you will require a large loan. That car loan can impair your future borrowing power. But this doesn’t mean that you need to choose just one of these two.

Let’s see how a car loan can influence mortgage applications and how we can deal with such a situation.

First Things First

When you apply for a home loan, you will need to provide information regarding your financial status. This means that you will have to give documents regarding your monthly income, assets you own and other ongoing payments. This is how a lender will determine whether you can pay back the loan or not. Every lender wants to avoid doing business with people who might not be able to keep their word because of their financial problems. They want profit, not excuses.

If it were a personal loan, your mortgage application would be fine. But since we are talking about an expensive car loan, your mortgage application might get rejected due to your other massive loan. Either that or come with a lot of restrictions.

mortgage-application

Will My Car Loan Affect My Mortgage Application?

A car loan will have a high impact on your finances. Given all the taxes you need to pay, a car loan can take most of your monthly income. Still, aiming for a cheaper car might be of some help. Since cars tend to lose their value quite quickly, getting a very expensive one may not be a good idea, especially if you intend to apply for a mortgage.

Mortgage applications will act the same so that you will be left with little to no money. This is why a lender will probably have to refuse your mortgage application.

A lender wants to know that you will pay your mortgage and you won’t default on it. He will analyse your assets and other methods of income. If he sees that you have the financial power to afford a car loan and a mortgage at the same time, he might give you the green light. If not, it might be better for you if you only had one.

Defaulting on a mortgage is not a good sign for your lender and your finances. Car loans and home loans can quickly turn into uncontrollable debts, and you might end up losing everything. So don’t think of the lender as the bad guy, but be objective and calculate what you can and can’t afford, because in the end, if you are dishonest, you will suffer the most. Because banks and lenders make sure they never lose.

eligible-for-loan

Can I Still Be Eligible for a Mortgage Application?

Yes, you can. Your car loan will affect how much you can borrow, but if you don’t want an expensive house, that a limited amount of money can be just enough. If you can’t get the sum you need, you can search for an affordable home. When it comes to loans and money, flexibility is a must.

If you want to increase your chances of getting your mortgage application approved, then it’s time to clean a little bit of your credit file. Pay your debts and try to repair your bad credit. Also, consider debt consolidation as a possibility. Lenders will check your credit to find out who they are dealing with and also what other assets you own, just in case they might have to make up for that loan with something else rather than your money.

Having a savings account is a great idea. It makes you more trustworthy and responsible in the eyes of your lender. Let’s not forget that having some savings might help you quite a lot to reduce the amount you would apply for.

Also, try to talk to your lender. The more information he gets regarding your situation and income, the bigger the chance of getting your request approved. Don’t forget to tell him your exact plans.

suitable-car-loan

Final Thoughts

So, the short answer is that a car loan can influence mortgage applications and under certain circumstances, it can get your requests denied. But do not let yourself discouraged. Evaluate your possibilities, cut down on the unnecessary expenses and, if you can, try to pay ongoing debts before applying for a mortgage.

You can talk about these details with Australian Lending Centre. Our friendly consultants will tell you about your chances of receiving a loan and, if you fit our criteria, you may even get a good mortgage option. Advice never harmed anyone so you should not miss the chance of clarifying your options face to face with an expert.

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Mortgage

The Reality of Mortgage Repayments

low doc home loans||low doc home loan||alc reality of mortgage repayments

In spite of the loan solution you carefully select, you should comprehend the way in which a loan works, and what it implies. Understanding the reality of mortgage repayments is the first step to making the right decision to fit your financial status.

Understanding Interest

Recently, Australians have benefited from low and attractive interest rates. So, how does this influence your mortgage repayments? Mortgage providers grow or diminish their rates, to mirror the movement exercised by the set cash interest rate. At the moment, interest rates are estimated at around 4.5 per cent, depending on the lender.

Although selecting fixed mortgage repayments over variable ones might seem the right choice, as it protects you from fluctuations, some other aspects should be considered. If you’re locked into a variable home loan, when the cash rate lowers, your interest will also decrease. Even though this is an unmatched advantage, Aussies should know that low rates don’t plan on staying this way forever.

To grasp the way in which this phenomenon influences your mortgage repayments, hear us out. A standard variable rate for a 25-year old loan of $200,000 would have a $1112 monthly payment, with 4.5 per cent interest rate. If this would change with as little as one per cent, it will either rise to $1228 or diminish to $1001.

Also, bear in mind that, over the life span of a loan, fluctuations may reach $100 per month. What we’re trying to say is that you should embrace a repayment plan with the right contingency measures, in the case in which the interest rate spikes.

When the Loan Matures

You should also note that the market conditions are due to change. That is inevitable. In this respect, you should take advantage of whichever opportunity you have to refresh your financial approach. An option might be to discuss with your financial advisor. But, before doing that, there are some solutions for adjusting your mortgage repayments:

  • Refinancing: When the interest rates are low, you can always consider refinancing. That may be a more convenient option. Even though there are exit and entry costs that should be factored in, as a general rule, you’ll recoup those expenses over the life of the loan.
  • Pay ahead: If the interest rates are low and your budget enables you, you should consider getting ahead on your mortgage repayments. If you manage to make a considerable repayment during this time, not only that you will decrease your overall loan balance, but you’ll save a lot on interest rate payments.
  • Fix your loan: If your credit conditions are permissive enough, we advise you to lock in the new low rate.

To conclude, comprehending the market conditions does pay off. When you sign a loan agreement, you should know what it implies, how the market is due to change and how it can affect you.

In spite of your current status, don’t hesitate to refresh your mindset, in the case in which the market alters in your favour. Why shouldn’t you take advantage of it? Nonetheless, bear in mind that you should discuss with your financial advisor before taking the leap.

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Debt Management Credit Card Consolidation Home Loans

Credit Card Debt and Mortgages Being Managed Properly

debt consolidation

This year has been a profitable one for Australian credit card debt and mortgages. According to the latest percentages, Aussies seem to be managing much better with their mortgages; their mortgage repayment appears to be going along much better than when compared with the previous year. Reports from the ABS data showed that their credit card debt had already dropped by 2.4% in January.

In the Money Survey from 2016, Mortgage Choice has discovered that at least ¼ of the respondents were faced with almost 12% month’s worth of wages in their offset account or going towards paying their mortgage. When compared to this situation, around 13% of Aussies claimed that they were facing this exact financial position somewhere around last year.

Aussies Can Now Manage their Credit Card Debt

CEO John Flavell has come to the realisation that today’s mortgage holders have become much more comfortable when it comes to dealing with their credit card debt. He also added that this isn’t surprising in the slightest since interest rates are currently standing at 60-year lows, which results in drastic mortgage repayments. This, in turn, makes it easier for homeowners to pay off their debts.

So, it seems Aussie cardholders have become used to managing their card debts, keeping it 34% lower in the month that followed Christmas. Average balances have gone from $77 to $3,114, and the conclusion was that the users are now savvier regarding the use of their credit cards. They are now paying off their debt before their deadlines and maximise their loyalty points by using their cards.

Australians have also become more imaginative when it comes to creating strategies that keep their balance down. They are now mostly opting for cards that have a 0% balance transfer, and thus they can pay off their balances without creating even more debt in return.

Ways to Manage Your Credit Card Debt

In case you were also wondering how to keep track of your credit card repayment, here are some money and credit card tips that could prove very useful.

  • Check your budget and see if you can make some extra mortgage repayments to lower your debt in interest which is going to get built up over time. Find a good strategy that would suit you, or look up for repayment calculators that will allow you to do the necessary calculations.
  • Make your next repayment a little higher than you normally do in order to lower your credit card debt. This way, you will be paying less interest.
  • Make use of features that are relevant to your home loan. Make extra payments to minimise the interest, then redraw the facility to make it convenient for you.

While managing your debts can prove to be difficult at first, with a little bit of research, you can find out ways to properly manage your mortgage and credit card debt.

Categories
Home Loans

Fast Track Your Mortgage Repayment

fast track mortgage repayments

Did you recently check the present status of your home loan and the progress you are making? If not, it is about time you did that. Why? Tracking your mortgage could genuinely help you to save a great amount of money while, at the same time, you can make your mortgage repayment increasingly faster.

This way, the thought of financial freedom can become a reality sooner than you think. Consider the following tips.

Fast Track Your Mortgage Repayment

  • Make smaller payments on a regular basis

One simple way of fast tracking your mortgage repayment is by dividing your loan into smaller amounts of money that you pay more often, on a regular basis. While this will help you to pay off your loan faster, it will also contribute to diminishing the lifespan of the loan, as well as the amount of interest you pay.

Let’s say that you make your mortgage repayment once per month. Instead, you should think of making fortnightly repayments. If you pay $2400 per month, divide this sum in half and, instead, pay $1200 fortnightly. This means that instead of paying $31,200 per year, you will only pay $28,800.

  • Increase the sum you typically pay

Believe it or not, by adding as little as an extra $10 to the amount you usually pay on a regular basis as mortgage repayment, you can genuinely reduce the lifespan of your loan. A good idea would be directing your tax returns, bonuses and gifts into your mortgage. It takes discipline and willpower but it is a possibility you should take advantage of.

  • Don’t diminish mortgage repayments when interest rate drops

In the light situation in which the interest rate is smaller than normal, and, as a result, your mortgage repayments are diminished, don’t fall into the trap of paying less. If you continue paying the same sum of money, you will manage to make considerable progress with your loan, decreasing the amount of interest.

  • Opt for an offset account

If it’s a viable possibility, consider opting for an offset account. A mortgage offset account is linked to your loan. The monthly interest is calculated by subtracting from your loan the sum that you have in your offset account. You can consider directing your savings into this account. The main advantage of an offset account is that it will save interest while you can benefit from accessing your savings account as well.

  • Consider a better deal

And last, but not least, your mortgage should meet your individual requirements and financial situation. If you feel overwhelmed by your mortgage repayments, consider talking to your broker about changing your loan. You can talk about making additional repayments, or look into refinancing options.

Categories
Investment Property Loans

Suburbs Where it is Cheaper to Buy Than to Rent

reduce mortgage repayment

Australian Lending Centre uncovers a number of suburbs in Australia where it is more affordable to buy property than rent.

According to research by property specialist RP Data, there are 74 suburbs across Australia where the monthly cost of renting is higher than that of a mortgage repayment. This is split respectively between regional and metro areas.
While the news is good for buyers, the report will set off alarm bells for tenants who are currently renting.

RP Data national research director Tim Lawless said, ”The effect of these combined factors means that renters are now doing their sums to determine whether paying off a mortgage is actually going to be cheaper than paying a landlord.”

Chris Riotto of the Australian Lending Centre has commented that; ”Low interest rates and current Government incentives are positive factors for Australians looking to buy a property and now with this new information on areas where it is cheaper to buy than rent consumers should definitely be weighing up their options’.

If you would like to talk to someone today about getting a mortgage or refinancing do not hesitate to contact us here at the Australian Lending Centre where our mortgage team will run through the options that may be available to you.

Call us on 1300 138 188 or simply fill out an express enquiry form on this page of our website.