Home Loans For You

Any loan taken in which you offer your home as a security is called as a home loan. In this type of mortgage, the security is the equity of your house. In case you default on the loan, the lender will use the equity of your house to realize the loan. Nearly loans of a million dollars or more can be easily availed using home loans.

What are the uses of home loans?

These loans are taken for a wide variety of purposes. The most common reason why loans are taken is to purchase the house itself which is offered as a security. Other reasons why a home loan may be taken are listed below.

1. Money may be required to pour capital into a new business set up.

2. Money may be required for the remodeling of a house or improving the look of the house.

3. Cash may be necessary for debt consolidation.

4. It may also be required for mortgages and

5. Many other purposes.

How is the Loan to Value in home loan market?

There is a lot of hectic activity in the home loan market in the recent past. This has led to plenty of modifications in this market. The main action the lenders have taken is to minimize the amount of loan and the loan to value (LTV) ratio.

Though certain financial institutions have not reduced their high loan to value (LTV) ratio, they have still tightened their procedures for home loan. Therefore, it is very tough now to get a home loan at a very low rate of interest.

How can you make sure you get a home loan?

Anyone who is occupied with a constantly paying employment will not find it tough to avail a home loan. This is because financial institutions feel safe and secure to lend money to you. However, if this is not the case and you work from home as a self employed person, then the lenders may consider it risky to lend money to you. This is because you do not have a constant flow of money. Therefore, they may be hesitant to lend money to you itself, leave alone offering you low rates of interest.

Bad Credit – Great Home Loans

Many people believe that once you have filed bankruptcy or developed bad credit you will never again obtain a home loan. Perhaps this was the case many years ago but it no longer holds true.
Actually, no matter how bad your credit history is, even one day after bankruptcy, you may still be able to qualify for a great home mortgage.
The Australian home loan market has changed markedly over the past decade. Many lenders offer both Good Credit and Bad Credit home loans. Some lenders specialise specifically in providing home loans to applicants with a bad credit history. This section of the lending market is known as Sub-Prime and also includes persons with no credit history such as the immigrants or the young.

Sub prime lenders are generally happy to offer home loans to even the highest risk applicants. The interest rate that the applicant is charged on their home loan will be commensurate with the perceived risk by the lender in relation to such an applicant. Lenders will consider your credit history, income, expenses and long term debt when assessing your application. If your credit history includes foreclosures, bankruptcies, delinquent payments, and outstanding debt, they will take all of this into consideration in setting your rate. Applicants who are able to demonstrate a history of steady employment, a good income, and consistent repayment of previous debts are more likely to get a better interest rate.
The good news is that the sub prime market is extremely competitive. Consequently, even if you have some history of bad credit is quite possible to obtain a great mortgage at a reasonable interest rate. Some Sub Prime lenders are offering Bad Credit home loans at rates very close to the current Good Credit Home Loan rates offered by the major banks.
One distinct difference is in the requirement to have a deposit. Bad Credit home loans are not available without a deposit. Some lenders will accept as little as 5% plus settlement costs, while other lenders will require a deposit of 15% plus. The amount of the required deposit can also depend on the number of credit problems in your past. Generally speaking, the more deposit you are able to provide the lower you can expect you home loan interest rate to be.

How do you know if you have a Bad Credit rating?

If you have been involved in any disputes with lenders, had property repossessed, signed a formal Debt Agreement with your creditors, or have filed for bankruptcy, your credit rating has been affected.

Prior to applying for a home loan it is a good idea to obtain a copy of your credit report so that you are familiar with what it says. There may be defaults listed that you did not know about. Perhaps some of the entries on the report are incorrect. You are able to contact the Credit Report provider and contest errors on the report. To do this – you first must obtain a copy of your credit report.

A number of Sub-Prime lenders are happy to offer the borrower with some history of bad credit the opportunity to obtain a Good Credit home loan. To do this, you must first apply for their Bad Credit Mortgage. After a period of time the lender will assess your repayment history and providing all payment were made on time as required you may be able to have your rate reduced.