18 Ways to Reduce Your Mortgage Loan

1. Skip the introductory rate (Honeymoon)

Beware of lenders bearing gifts! Introductory or honeymoon rates have long been an important marketing tool for lenders. 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. An example of this is an Adjustable Rate Mortgage (ARM).

There are two problems with this scenario. First, the variable rate is often higher than some of the lower basic loans available so you could end up paying more. Second, you need to clearly understand that a honeymoon rate applies only for the first year or two of the loan and is a minor consideration compared to the actual variable rate that will determine your repayments over the next 20 or so years.

You may also be hit with fairly steep exit penalties if you want to refinance in the first two or three years to a cheaper loan. So make sure you fully understand what you are letting yourself in before setting off on a “honeymoon” with your lender.

2. Pay it off quickly

Time is money. There are all sorts of strategies for paying less interest on your loan, but most of them boil down to one thing: Pay your loan off as fast as you can. For example, if take out a loan of $300,000 at 6.5 per cent for 30 years, your repayment will be about be about $1,896. This equates to a total repayment of $682,632 over the term of your loan.

If you pay the loan out over 15 years rather than 30, your monthly payment will be $2,613 a month (ouch!). But the total amount you will repay over the term of the loan will be only $470,397 – saving you a whopping $212,235

· Make repayments at a higher rate

A good way to get ahead of your mortgage commitments is to pay it off as if you have a higher rate of interest. Get a loan at the lowest interest rate you can and add 2 or 3 points to your repayment amount. So if you have a loan at about 6.5 percent and pay it off at 10 per cent, you won’t even notice if rates go up. Best of all, you’ll be paying off your loan quicker and saving yourself a packet.

· Make more frequent payments

The simple things in life are often the best. 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 (bi-weekly) rather than monthly basis. How can this make a difference I hear you ask? It works like this:

Split your monthly payment in two and pay every fortnight. You’ll hardly feel the difference in terms of your disposable income, but it could make thousands of dollars and years difference over the term of your loan. The reason for this is that there are 26 fortnights in a year, but only 12 months. Paying fortnightly (bi-weekly) means that you will be effectively making 13 monthly payments every year. And this can make a big difference.

Using our example from above, by paying monthly, you will end uprepaying $682,632 over the term of your loan. But, by paying fortnightly (bi-weekly), you will save $87,254 in interest and 5.8 years off the loan. Zero pain to you, major benefit to your pocket.

· Hit the principal early

Over the first few years of your mortgage, it may seem that you are only paying interest and the principal isn’t reducing at all. Unfortunately, you’re probably right, as this is one of the unfortunate effects of compound interest. So you need to try everything you can to get some of the principal repaid early and you’ll notice the difference.

Every dollar you put into your mortgage above your repayment amount attacks the capital, which means down the track you’ll be paying interest on a smaller amount. Extra lump sums or regular additional repayments will help you cut many years off the term of your loan.

· Forego those minor luxuries

This is the bit you don’t want to read. Once you have a mortgage, your life is likely to be luxury-free (or at least pretty close to it). Think of all the weight you will lose by giving up your favourite indulgent snack. For the sake of your health you should quit smoking and drink less anyway. Take your lunch from home and save on bad fast food. Trust me, your body will thank you for it.

If you’re still not convinced consider the following example. A typical day may include a pack of cigarettes ($10), a coffee and donut ($5), lunch ($12) and a couple of beers after work ($8). That’s $35 a day or $175 a week or $750 a month or $9,100 a year.

Assuming a mortgage of $300,000 at 6.5 per cent over 30 years, by making $750 in extra repayments each month, you’d save more than $216,000 in interest and be mortgage free in just over 14.5 years.

No one is saying you should live a convict existence but just cutting down a little on your expenses will see you reap huge financial benefits.

3. Get a package

Speak to your lender about the financial packages they have on offer. Common inclusions are discounted home insurance, fee-free credit cards, a free consultation with a financial adviser or even a fee-free transaction account. While these things may seem small beer compared to what you are paying on your home loan, every little bit counts and so you can use the little savings on other financial services to turn them into big savings on your home loan.

There are also “professional” packages on offer for amounts over a certain limit, which can be as little as $150,000. Some lenders offer discounts to specific professional groups or members of professional organizations. Ask your lender if your occupation qualifies you for any discount. You might be pleasantly surprised. There are all sorts of discounts and reductions attached to these packages so make sure you ask your lender about them.

4. Consolidate your debts

One of the best ways of ensuring you continue to pay off your loan quickly is to protect yourself against interest rate rises. If your home loan rate starts to rise, you can be absolutely positive about one thing – your personal loan rate will rise and so will your credit card rate and any hire purchase rate you may happen to have.

This is not a good thing as the interest rates on your credit cards and personal loans are much higher than the interest rate on your home loan. Many lenders will allow you to consolidate – re-finance – all of your 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 7.32 per cent.

As always, any extra repayments or lump sums will benefit you in the long run.

5. Split your loan

Many borrowers worry about interest rates and whether they will go up but don’t want to be tied down by a fixed loan. A good compromise is a split loan, or combination loan as they are often known, which allows you to take part of your loan as fixed and part as variable. Essentially this allows you to hedge your bets as to whether interest rates are going to rise and by how much.

If interest rates rise you will have the security of knowing part of your loan is safely fixed and won’t move. However, if interest rates don’t go up (or if they rise only slightly or slowly) then you can use the flexibility of the variable portion of your loan and pay that part off more quickly.

6. Make your mortgage your key financial product

Mortgage products known as all-in-one loans, revolving line-of-credit or 100 percent offset loans allow you to use your mortgage as your key financial product. This means you have one account into which you can pay all of your income and draw from for your living expenses by using a credit card, EFTPOS or a checkbook, as well as making your mortgage repayments..

Everything To Know About Payday Loans Online

Payday Loans are the loans which are granted for a very small amount of time on the guarantee that they would be repaid as soon as the next salary or income from their source of earning. Such loans have an extremely high rate of interest and are called by different names such as payday advance, payroll loan, salary loan, small dollar loan or cash advance loan. A payday loan can be offered to anybody irrespective of their credibility. The bank does not see the credit worthiness of the borrower in case of granting this type of loan as it is granted for only 15-20 days and is not long term. The borrower should, however, keep in mind that taking a payday loan would not increase his credibility in the market. He, nevertheless, should have a steady income, permanent bank account and a work experience of at least 6 months to avail this loan.

Online payday loans are becoming more and more popular these days. One the best thing about online payday loan is its simple application process. The application takes less than 5 minutes to complete and the portal is usually open 24 hours a day. The borrower can simply file the application for the loan online and the funds are transferred by direct deposit to the borrower’s account. The repayment of loan in such a case is directly withdrawn electronically from the borrower’s account after he gets his next salary or after his post-dated cheque becomes mature. A list of the Direct Payday Lenders is as follows:

Check Cash: They give their approval application within 5 minutes by providing loans online or at their offices is U.S.
CashAdvance.com: They provide an online payday loan once the customer is approved by checking his valid account and not any prepaid or savings account.
Cash Central: This is one of the oldest payday lenders in the country with a 24*7 online application portal.
MypaydayLoan: This too provides the customer with an approval response within 4 minutes of a completed application form. It is one of the largest of its kind in the country.
Blue Trust Loans: It funds loans between $300 to $1250 in almost every state. With a payoff time of 6 months approx.., these loans have no penalty for repayment.
MoneyLion: They offer loans to almost every state in the country with varying rates and terms in each state. It has loan programs available for consumers on all ends of the credit score spectrum.
Net Credit: It provides an instant approval decision with no borrowing limits for first timers. Applicants are eligible for $1000 to $10000 loans.
Maxlend: They have many different loans and terms and credit worthiness is not a criterion which is considered. It offers personal loans up to $1300.
There are some jurisdictions which limit the amount of interest charged on loans including payday loans. Depending on the method used, the annual percentage rate (APR) of each loan may be different. In U.S.A, for example, the Uniform Small Loans Laws (USLL) has fixed the APR between 36% to 40%. The major advantages that these types of loans provide major profitability to the industry, welfare for the households is increased as people who do not require short term loans can avail long term loans easily and it provides a service which is unavailable in the market as the requirement of the loan is usually by people who have exhausted all their other options of buying short-term credit. This type of loans is also criticized by some people on the ground that they drain money from the low-income group communities by charging exorbitantly high rate of interest. Also, in some countries, the collection practices of the lenders are extremely aggressive unlike in countries like U.S where there is a standard collection practice set by the law.

Loans UK- Loans to Suit Every Pocket

Human desires are unlimited but the finance that one acquires always seems to be scarce. Thanks to the diversity of loans available in the UK finance market which helps in fulfilling the desires and dreams of millions of the UK residents.

UK loan market at present is swamped with infinite number of loan options. Different loans have been designed keeping in mind the diverse needs and expectations of people in the UK. If you are an individual looking for a loan to buy a car, a personal loan can be a perfect option for you. Now, here also lenders can offer you the option to go for a secured or an unsecured loan. Does these words sound new to you? Let me explain it to you.

A secured personal loan is a secured loan offered to meet personal needs of the UK residents. To avail this loan a borrower needs to put collateral against the loan. Your car, home or even a saving bank account can work as collateral. Secured loan helps borrowers in making the best use of the equity stored in his or her property that helps him in borrowing a larger amount of loan and that too for a longer loan term.

Unsecured personal loan UK does not require a borrower to put any collateral against the loan. Tenants who do not own a home can enjoy the benefits of unsecured loans. Not only tenants, homeowners who do not want to keep their property at risk can also apply for an unsecured loan.

Personal loans UK were introduced to serve personal purpose of the borrower. Personal loans are classified as secured and unsecured loan on the basis of security attached to the loan. They can also be classified on the basis of usage – Business loan, home improvement loan, debt consolidation loan, car loans, holiday loan, wedding loan and many more.

Different personal loans serve different needs. A business loan can be the perfect solution for an entrepreneur who needs funds to expand his business. An individual who is caught in the midst of debt trap can take a debt consolidation loan, to reduce the debt burden and become debt free in the future by paying the existing debts. A debt consolidation loan can also be used to improve the credit score and enjoy the benefits of loans arranged at low APR in future.

Other loans offered by the lenders in the UK are – Payday loans are available to provide instant cash to the borrowers until the next paycheque arrives. Bridging loans can be used to fill in the cash shortfall existing in a property transaction and many more. Each loan has different features; you can find the loan you are looking for from the vast number of loans offered by lenders.

The loan service is not confined to a group of people. Lenders in the UK aim to cater to the needs of each and every individual. A good score will help you get a loan at better loan terms. Even if you have a bad credit score there is nothing to worry. There are lenders in the UK who can arrange loan for you and that too at a lower rate of interest.

Only a few years’ back traditional lenders ruled the UK loan market. The loan process was lengthy and full of hassles. Borrowers had to wait for months to find whether they will be getting the loan or not. A borrower had to approach each lender personally and submit his or her loan application form.

The entry of online lenders has revolutionized the whole loan market in the UK. Now, a borrower can access infinite number of lenders at one time without even moving from one place to another. What you need to have is a computer equipped with Internet, that’s it.

Applying for loan online is easy, fast and convenient. The online phenomenon aims to save your precious time as well as invaluable money. You can browse through various lending websites and can apply for the loan by filling up the online loan application form that hardly takes 2 to 5 minutes. Most of the lenders provide you with the loan decision within 24 hours. You can also apply for a loan quote that are offered for free or for nominal fees by majority of the lenders. Gathering loan quotes from various lenders and comparing them will help you find the best loan option and lender.

If you dare to dream, lenders in the UK can help you fulfill your dreams with the loans UK. Growing desires among the lenders in the UK has given rise to the increasing number of loan options in the UK. Whatever may be the need, just a little bit of research will help you get the loan of your choice.