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How Often Should You Review Your Home Loan?

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A home loan is a long term engagement, and cannot be taken lightly by any means. Most home loans last for a period of fifteen to twenty years, and a lot can happen during this time. Your home loan should be reviewed quite regularly since the future is always uncertain and you should know how the status of your loan is progressing. You loan and your needs should be well-aligned with each other, irrespective of how your financial situation changes during the time.

A number of things can affect your financial situation- the status of your job, changing government policies, changes in rates of interest, the economic situation of your country and so on. This is why you should always be updated regarding the outstanding amount on your home loan, so that you can take a decision regarding what your home loan would require- a balance transfer, top-up or foreclosure. Therefore, ideally, it is advised to review your home loan every four to five years.

  • Balance transfer:

This is a common method followed by many people with outstanding home loans. Over the years, it may be possible that you find financiers who provide better interest rates and more attractive options than your initial financier. In this situation, you can always transfer the loan from one agency to another, provided you have a history of timely payments and a good credit score. You simply need to submit some documents and a no-objection certificate along with your payment history to the new agency to enjoy the new benefits.

  • Foreclosure:

As the name suggests, this implies an earlier closure of your outstanding amount or paying a significant part to lower the EMI. This can be a good option of your financial condition improves in a stable way, and then you would no longer need to worry about the status of your home loan. You would need to submit the required documents along with an application for part payment or foreclosure, and of course, the loan sanctions paper. Once you close a home loan, always remember to take the original property papers from the financier.

  • Top-up:

As the name suggests, this essentially denotes an additional amount that can be availed in case the previous loan does not cover all your requirements. To avail the top-up loan facility, you would need to submit the required documents along with proof of income and employment and all the previous chain documents. Since this is a personal loan, the interest charged is usually higher than your earlier home loan.

When you review your home loan status periodically, you are up-to-date on how you should proceed with paying the outstanding amount depending on your present financial situation. You can then choose from among the options mentioned above and make your decision.

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Things to Do Now to Buy Home in Future

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Buying a new home is a major financial step in one’s life. There are a lot of formalities included in the home buying process that one has to complete to own a home. This is the reason why it is suggested to start preparing yourself long before stepping in the home buying process. Start searching online about all the legal formalities included in the process and take the advice of people who have recently bought a new home.

Want to know what things you need to do now to become a homeowner in the coming year? Then read the tips explained below.

Start by saving – If you are serious about buying a new home sometime in future, then it is crucial to start saving now. Indulge in good savings plan early. Set budget for your daily expenses and don’t expend money on unwanted things. If you follow your savings plans strictly and build up a good deposit, then you will not have to borrow more from the mortgage lender. Lesser you will borrow, lesser will be the mortgage repayment.

Get rid of debt if any – This is one of the most important steps towards preparing yourself for purchasing dream home in future. Work on paying down your debt as it will help in improving your credit score and you may get a mortgage at a low-interest rate. Moreover, by paying down the debts, you will get rid of extra expenditures and will not feel stressed while buying a home.

Calculate how much you can afford – It is vital to understand how much you can spend on a new home. Also, by calculating your budget, you will determine how much more you need to save to buy the house of dreams in future. It is highly recommended not to exceed your budget while buying a home. Otherwise, you will have to face unwanted stress as surpassing the set budget you may not be able to meet your day to day expenses. Remember, you need to plan things in such a way that home buying does not bring worries in your life; instead, it should fill your life with excitement.

Improve your credit score – Start improving your credit score now if you want to buy a home the next year. Pay all your bills and outstanding payments to have a good credit score. Doing so is important because your credit score is the first thing that mortgage lenders check before approving any mortgage application.

Contact a mortgage broker – If you have a good credit score, the get yourself pre-approved for a loan before you see any home. Getting yourself pre-approved you will have a fair idea about what kind and size of a property can you afford.

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Buy House in Canada – Tips by a Pro

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Are you ready to buy a house in Canada? If yes, then this post is exclusively for you.

Who doesn’t want to gift their family a place that they call their own? Everyone does! For this reason, they go the extra mile and save as much as they can to buy a house of dreams one day. But, are you aware of what is involved in the home buying process? Where home buying fills you with excitement, the task can be overwhelming too. As a lot of steps and formalities are included in the process, you can get stressed a lot many times. But, you can reduce the stress level if you spend some time in understanding how to own a house in Canada.

So, let us discuss some tips to buy a house in Canada.

Save, save and save – The first and the most logical step towards buying a house is to save as much money as you can. It is because more the money you will have for the down payment, chances of getting a residential mortgage at a lower interest rate will increase. So, if you are planning to buy a house in the near future, then start saving and stop expending money unnecessarily.

Set your budget – Budget is a very crucial factor that one should not overlook while buying a new house. A realistic budget is something that plays a significant role in deciding what will be the size of your home and what all luxuries will be included in it. Make sure to analyze your income and daily expenses while making the budget.

Check mortgage options available – As there are several mortgage options available, you have to determine which mortgage type is suitable for you. In order to learn about the mortgage, surf on the internet and take the help of mortgage experts. Also, try to get pre-approved for a mortgage before starting your search for a house.

Make a list of features you need in your home – When it comes to buying a new house, you must know your requirements. Make a list of things and features that you need in your home. Also, talk to your family members while making a list as a task done in collaboration can yield better results. Look at your present place, see what important things it lacks and plan accordingly.

Hire realtor – Realtor is the most crucial person in your home buying process. As he has access to various homes available in the city, he can help you in buying the house of your dreams. Make sure to perform background checks and read online reviews before selecting any realtor for yourself. If you wish to purchase a home in an area of your choice, select the realtor who has knowledge about that particular area.

Make an offer – This is the most important step in the home buying process. Also, if you want to negotiate, then go ahead, don’t hesitate in doing so.  

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Four Smart Tips to Get Approved for Personal Loans

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When applying for a personal loan, facing rejection is the last thing you would want. But, because these loans are unsecured and have higher risk factors involved, the lenders are not very open to offer them as a part of their mortgage programs. So, getting approval for such loans is kind of difficult.

Personal loans are usually availed for reasons such as remodeling the house, planning an international trip, managing the debt consolidation, funding the medical expenses, making arrangements for the wedding and similar others.

These loans are not backed by any collateral asset. And, thus, the lender cannot auction anything you own in case of any default. However, he is going to charge you the rate of interest that is higher in comparison to other loans for the safety sake.

Now, because personal loans are extremely useful in almost every aspect, they are worth considering when making a purchase or investment. If you wish to boost the chances of getting approved for this loan, keep in mind the following tips –

  1. Calculate your Credit Score

A good FICO score is an indication of your ability to repay the loan. It is a method of quantifying and evaluating your creditworthiness based on your payment history, amounts owed, length of credit history, new credit and credit mix. The higher this score, the more are your chances of getting approved for a personal loan. So, if you have a lower score, it is recommended to wait and improve it by paying off your pending bills and debts.

  • Avoid Filling Multiple Loan Applications

This is one of the major mistakes loan buyers make when looking for a personal loan. They send loan application forms to multiple lenders or financial institutions thinking to receive a response from at least one of them. However, such a move makes you seem desperate and gives a bad impression of your financial status. Moreover, you end up affecting your credit scores if you don’t get approval from them.

  • Search for a Reliable Lender or Broker

You have to do ample homework to search for a good lender or mortgage broker. In case you are struggling with poor credit scores, you have to look for someone who specializes in high-risk borrowing. Stay away from payday and title loans because they can keep you in permanent debt, with their unrealistic fees. In fact, avoid every offer that seems too good to be true and instead derive an in-depth comparison to get the best deal and low-interest rates.

  • Keep an Eye on your Debt-to-Income Ratio

At any given point of your life, spending more than forty percent of your income towards monthly loan repayments can be highly detrimental for your overall finances. Hence, if you earn $2500 a month, you shouldn’t be paying out more than $625 for your EMIs. By no means, your monthly debt should take a toll on your monthly gross income. Try to keep the debt-to-income ratio as low as possible and don’t borrow unless very necessary.

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Things You Need to Ask Your Mortgage Broker

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Are you planning to buy a mortgage, but don’t have enough knowledge about it? Are you first-time mortgage buyer? Do you want to renew your mortgage? Do you want to hire a mortgage advisor but don’t know how to spot the best professional? If your answer to any of these questions is yes, then this article is for you.

Hiring a mortgage advisor can be an overwhelming task, especially if it is your first time. When you are in the market, there is much more to consider than the interest rate. But, if you successfully hire the right mortgage broker, you can rely on him for all the mortgage-related tasks. He will leave you stress-free by doing all the formalities and paper-work on your behalf.

However, all the brokers are not the same. Some take their profession seriously and help their clients in cracking the best deal. While others work for the sake of commission. To make sure that you work with a reliable mortgage pro only, don’t forget to ask him the following questions.

Question #1. Can you provide references?

Firstly, ideal is to take recommendations from friends, relatives or neighbors. But, if you have selected mortgage specialist through a listing available on the internet, then ask for references. A true broker who is true to his profession will happily provide you with the reference list, whereas, an unethical and unprofessional person will only make excuses. Don’t work with the later ones.

Talking to the previous clients, you can learn about their experience with the broker during the entire process. Ask if they were treated fairly or not. Also, ask will they work with the broker in the future if required.

 Question #2. From how many years you are working as a mortgage broker? 

Now, this is among the most important questions as it will help you in learning about the experience of the loan advisor. More the number of years into the brokerage more will be the experience. Hence, the best advice you will get.

If you think that going for the amateur broker will cost you less, then it is your biggest myth that you should debunk right now. Only an experienced broker has good links in the market and can help you in getting the loan at the lowest rate possible.

Question #3. What type of loan will work best for me?

Several types of mortgage options are available in the mortgage industry. But you need to find the one that works best for you. A trustworthy and reputed mortgage broker will patiently explain all the loan types to you and will also suggest the best loan option. He will analyze your needs and financial situation thoroughly before reaching any final decision.

Moreover, this question will help you in knowing how much knowledge do mortgage broker has about the loan and its types. So, don’t miss asking this crucial question if you want to know your mortgage broker in a better way.

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Different Ways To Shop For A Home Loan

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It is always wise to have a plan set in place before making a huge lifetime investment. This principle also applies when planning to buy a home through a mortgage. You need to make an extensive research and check out different lenders to get low mortgage rates in Quebec. If you are thinking of buying a home for the first time, here are some of the strategies you can use to qualify for the lowest mortgage rates available in the market.

Form a baseline

Talk to friends or colleagues who have undergone the process of acquiring a home loan to recommend a good lender with a flawless reputation. Make a point to meet with the lender to discuss your credit score and get to know your home loan options. Get all the details you need on repayment plans to ensure you make an informed choice before settling on a particular lender.

Work on your credit score before applying for a home loan

How is your current credit score? Do you have a good or bad credit score? If you are not sure where you stand, check your financial statements to see how your credit score is rated. If you have a good credit score, you stand a better chance of getting low-interest rates on your home loan. If your credit score is far from good, you don’t need to worry if you qualify for a home loan. Most lenders are willing to work with you to come up with ways you can repay your home loan without struggling much. You can increase your credit score by ensuring you pay off your monthly credit card bills and other loans on time.

Decide on your loan term

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Don’t shy away from discussing your loan term with your lender. Be honest about your current financial situation so that they can work out the best loan term for you. You need to keep in mind that a longer loan term will attract high-interest rates compared to a shorter loan term. How long you plan to keep your house can also influence the type of home loan you apply for. For example, you can apply for 5/1 hybrid mortgage if you plan to own a house for less than five years. This allows you to pay low-interest rates on your mortgage for the first five years. You can then look for a buyer for your house after the five years and sell off your home.

Check for any hidden charges

Before signing any papers on a home loan contract, check for any hidden charges. This helps you to calculate how much you need to pay on a monthly basis. If you find some terms in the contract are too hard for you to understand, ask the lender to explain them or better yet get a lawyer to simplify them for you. See if you agree with the terms and conditions on a contract before you sign. You should take your time to make a decision and never allow a lender to push you to make the decision if you don’t feel ready to make a commitment.

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Why It Is Important To Shop Around Even When Looking For Help In Clearing Debts?

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There are times that we are unable to meet our financial targets and this can cause more problems by not being able to pay debts on time. During this time, one is desperate to seek solutions to debt crisis by seeking debt consolidation. One is usually very vulnerable at this stage and they can easily fall prey to scammers who seek to take advantage of your situation. Consumer credit counseling can help you clear your debts by offering possible solution tactics you can follow. However, you need to ensure that you sign up with the right agency so that you don’t get to become a victim to scammers. These are signs you need to be on the lookout for before signing up with an agency.

The range of financial services offered

Check to see what kind of financial services are offered by the agency. Usually, an agency will offer more than one financial service. They can offer budget counseling for those heading towards debt problems and housing counseling for people facing foreclosure on their homes. These are just a few. These counseling sessions can be one on one or over the phone or even over the internet depending on what works for you. A small maintenance fee is required and you should have your payment records well kept on your side. This applies even to the nonprofit agencies.

Don’t be pressured into signing debt management plans

Be wary of agencies that pressure you to sign up for any sort of debt management plan. It usually takes a credit counselor one hour to evaluate your income, expenses and debt before they can come up with a solution. If a credit counselor is rushing through this process, then they may not be legit. You should never be asked to pay any fee upfront before getting some counseling evaluation on your issue. Note that no agency has the power to erase information on a credit report and the only way to do so is by planning to make payments over time. A good agency will help you plan how to achieve that.

Ability to help resolve debt problems

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A genuine debt consolidation agency will have a good reputation of helping its clients get out of debt successfully. You can research first on an agency before signing up by asking for references from family and friends. You can also check the reviews on their website from people who have been there before. To check if the agency has a good standing, check with the Better Business Bureau to check out of any complaints made against them. In this case, it is best to be realistic that there will be always someone who has something to complain about. What is important is to check how the case was handled and how the customer service was.

Is it a non-profit?

Just because a debt consolidation agency advertises that they are a non-profit does not mean that they are legit. You can check an agency out from a third party accredited organization to inquire about the legitimacy of this agency.

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Helpful Ideas In Acquiring Low Mortgage Rates

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Buying a home and securing a mortgage is a major financial commitment. This is why you need to make an informed choice before settling on a mortgage rate from a certain company. For a first time home owner, this process may seem overwhelming but with the right research, you will be well equipped with the information you need to help you make a decision. We are going to look at some ideas that will help you get low mortgage rates.

Mortgage type

Mortgage type

There are two types of mortgages available in the market. Fixed rate mortgages and adjustable rate mortgages are given depending on the requirements of the client; however, many home-owners go for the fixed one. As a soon-to-be homeowner though, you need to understand what each type offers.

A fixed rate mortgage is one that offers a fixed rate of interest that you will be paying throughout your repayment period. The benefit of this type of mortgage is that you can easily plan on how you will pay at the end each month. The rates are not affected by the economic status. However on the downside, if there are favourable economic conditions, you will not get any financial relief. Knowing this you will decide which type of will work the best for you.

Deposit amount

Every approved loan needs an initial down payment. Mortgage brokers advise their clients to save first before buying a new home. You need to understand that when you make a huge deposit on your down payment you get low interest rates but if you pay less you get high interest rates.

Additional costs

Usually, at the final process of paying off a mortgage, there are costs that one needs to pay off. They roughly add up to around 3% of the actual property value. The lenders charge this amount to constitute costs to cover things such as the processing fee, underwriting title insurance costs and appraisal costs. As you look around check on mortgage lenders that offer the best deal on closing costs.

Loan estimates

Compare mortgage deals from various lenders before making a decision. However one is advised to seek the services of a mortgage broker since they will save you the time that you will use going round checking on mortgage terms. They are well experienced and since they liaise between you and the lending institutions .They already have the information that you need. They advise you on where best to invest in.

Credit score

There are implications that come with getting into signing off on a mortgage if one is not fully ready to make the investments. Checking your credit score ensures that you get your financial position and if you have a low credit score, it advisable to first work on improving the score before applying for a mortgage. However even with a bad credit score you can still apply for a mortgage and your mortgage broker can help you with this. If you decide to take on the mortgage you can later decide to refinance your home and increase your credit limit which allows you to pay in smaller instalments.

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How To Save For A Mortgage Down Payment

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Gone are the days when you have to allocate a very huge amount of cash in order to purchase the property you have always wanted. Now, in the Canadian mortgage scene, you can potentially buy the property within a certain percentage of down payment, which is often five percent. When this is the case, however, you will be required to have mortgage default insurance which then brings you back to just settling for more than the 20% down payment for the property.

This is called the conventional mortgage or one where you are expected to pay at least 20% of the property’s value as down payment with the remaining 80% or less financed through a lender. This will then be the Loan to Value ratio of your property. Always remember that the higher the contribution you make, the lesser the mortgage loan amount you will pay over time. Whichever the case, whether you choose a 5% or more than 20% down payment, you might as well consider learning how to save for that amount.

Save your funds in an account

save funds

Saving for the down payment is perhaps the most practical way with which you can get that dream home of yours. It will take time to save this amount if you do not learn how to choose the right account with which you should save those funds. It is recommended that you have an account that guarantees you will gain interest on your savings. Mutual funds, term investments or a Canadian Tax-Free Savings account can be a good start. You may also want to invest with a Registered Retirement Savings Plan (RRSP).

If you are lucky enough, you can also use the cash gifts given by your friends and loved ones. You can save the same in any of the funds mentioned above so that when the time comes and you are ready to make an investment, there is something you can use to finance your down payment.

Secure mortgage default insurance

If in case you have not saved the 20% down payment but you have at least 5% savings to finance the down payment for your dream home then you are good to go provided you have secured mortgage default insurance. You can look for the best suppliers of such insurance in Canada. This insurance is a licence for you to obtain the nod of the lender since there is something he can ran after in case you default on your payment. Do not mistake this with the regular homeowner insurance that protect homeowners from property damages.

Pay the insurance accordingly

You have choices when it comes to paying the mortgage default insurance. First, you can pay it on a lump sum basis right at that instant when you have closed the mortgage deal with the lender. If you do not have enough money to pay it lump sum, however, you can go for option number 2, that is, to pay the insurance over time in addition to your monthly mortgage amortisation.

It will be wise to compare mortgage rates to save you more in terms of your total investment later on. Feel free to compare rates via this website!

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How To Make A Bad Credit Mortgage Work In Tough Financial Times

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One of the most common challenges people with bad credits face is getting a good mortgage. Luckily, there are bad credit mortgages that cater specifically to such individuals. People make financial mistakes sometimes. However, it does not mark the end of your dream to own a house. There are useful ideas that make things work even with bad credit. Hard financial times and mistakes put you on the right footing when you learn from them. To make a bad credit mortgage work for you, you need to consider the following ideas.

Type of lenders

Lenders

Many lenders will probably turn you down when you approach them for a loan with a bad credit score. By searching around carefully, you can still find lenders who can assist you in your current financial situation. It is possible to get a mortgage with a bad credit. Bad credit mortgage lenders make it possible. However, you need to be careful when selecting a lender. There are lenders who may take advantage of your situation. Ensure you find reputable bad credit mortgage lenders before taking further action.

Work on short-term basis

For a fact, it is costly to get a mortgage with a bad credit. If you decide to get the mortgage loan, you need to consider making it a short-term commitment. It pays in the long run when you choose to make short-term commitment. Managing the mortgage payments over a short-term period makes it possible for you to be eligible for conventional loan programs that have low interest rates. Note that this does not imply getting a short-term loan as an alternative. It simply means ensuring you pay the mortgage on time. This is inclusive of all your debts and bills. Over time, your credit score will improve and earn you a chance for better conventional loans.

Adjustable-rate mortgage

The interest rate for a fixed-rate mortgage may be too high for you during tough financial times. Therefore, you can consider an adjustable-rate mortgage as it guarantees you the possibilities of getting low rates. It helps keep the mortgage payment low and realistically manageable in your current financial situation. Consult mortgage experts for more clarity on how to make good use of an adjustable-rate mortgage.

Payment penalties

Different types of lenders have varying terms and conditions. For instance, there are mortgage lenders who have a prepayment penalty option. These lenders often convince borrowers to take the option. In a mortgage contract, this clause essentially gives the lender the liberty to collect additional money when you make early payment or additional payments beyond a given limit with a view of reducing the debt. Over time, it can be very costly. You can make extra payments if you are in a good financial position as it will help reduce your debt. For the clause, do not consent to the idea.

Working with a reputable mortgage broker is highly recommendable especially when you are in a tight financial spot and you need to make critical choices. A broker will help you to make use of all these ideas in the most effective way.

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