Loans – credit personal loan consolidators

October 22, 2008

Finding The Right Loan For Your Needs

Joseph Kenny asked:


There comes a point in most people’s lives when they need financial assistance. This financial assistance most often comes from a loan. If you are in need of a loan, do you know that you have a wide variety of choices? To increase your changes of being approved for a loan, you are encouraged to examine the loan types that are currently available.

Perhaps, the most commonly obtained loan is an automobile loan. Automobile loans can help you purchase a new or used vehicle. Before being approved for an auto loan, your bank may be interested in examining the vehicle. If you fail to make your loan payments on time, your lender will obtain possession of the vehicle. The condition of the vehicle may help to ensure that they do not lose all of their money.

While automobile loans are often considered the most commonly obtained type of loan, there is another type of loan that is increasing in popularity. That type of loan is a debt consolidation loan. All around the world, millions of individuals are indebt. Sometimes, the only way to get out of debt is to seek financial assistance. If you are in debt and need to get a debt consolidation loan, you are encouraged to apply for one as soon as possible. Overtime, debt will have a negative impact on your credit. That negative impact may make it difficult or impossible for you to obtain a loan, even a debt consolidation loan.

If you are interested in attending college or you are the parent of a child who is planning on furthering their education, it is likely that you will need to apply for a student loan. The cost of college is expensive. In fact, it is so expensive that many families cannot afford to send their children to school without scholarships, grants, or student loans. If you are worried about repaying your student loan, you don’t necessarily have to be right away. A large number of financial lenders do not require you to start making payments on your student loan until after you graduate from college or finish attending classes.

While student loans, automobile loans, and debt consolidation loans are popular, there is a chance that your purpose for obtaining a loan cannot be included in those categories. If this is the case with you, you may need to obtain a personal loan. Personal loans are defined differently by different banks. Common uses for a personal loan include a new computer, vehicle repairs, medical expenses, and more. Personal loans are often more difficult to obtain than all other loans. Unlike debt consolidation loans, student loans, or automobile loans, the bank is not handing over their money to a business; instead they are giving it to you. This may sometimes make a bank hesitant to hand out money.

Student loans, debt consolidation loans, automobile loans, and personal loans can all be obtained from a number of different financial lenders. These lenders most often include your local bank or an online lender. As long as you have a decent credit score, preferably a good one, you should be able to obtain the loan that best fits your needs.



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July 16, 2008

May 23, 2008

Loans: Various Kinds, But Which One Can Help You

David Peters asked:


Whether you want to buy a home, finance your education or redo your house, there are many kinds of loans that can help you achieve your goals. Here is a helpful loan guide to introduce some of the most common loans available today.

Bad Credit Personal Loan

A Bad Credit Personal Loan is a loan ideal for people bad credit ratings. Your past record of County Court Judgments, mortgage or other loan arrears can live on to deny you access to finance that other people regard as normal.

If you own a home and have equity in your property, a Bad Credit Personal Loan can bring control back to your life. Secured on your home, a Bad Credit Personal Loan can give you financial freedom.

With a Bad Credit Personal Loan you can borrow up to 125% of your property value in some cases, which can help you.

Bridging Loan

When you need a loan to “bride” the financial gap between monies required for your new property completion prior to your existing property having been sold, a bridging loan can help.

Bridging loans are short-term loans arranged when you need to purchase a house but can’t arrange the mortgage for some reason, such as there is a delay in selling your current home.

A useful factor about bridging loans is that a bridging loan can be used to cover the financial gap when buying one property before the existing one is sold.

A bridging loan can also be used to raise capital pending the sale of a property.

Bridging loans can be arranged for any sum and can be borrowed for periods from a week to up to six months.

Similar to a mortgage where the amount borrowed is secured on your home, the bridging loan advantage of a mortgage is that it attracts a lower interest rate.

While bridging loans are convenient, the truth is that the interest rates can be very high.

Business Loan

Designed for an array of startup business needs including the purchase, refinance, expansion of a business, development loans or any type of commercial investment, a business loan helps startup businesses.

These loans are generally available at really competitive interest rates from leading commercial loan lenders.

A business loan can be secured by all types of business property, commercial and residential properties.

These loans can offer up to 79% LTV (Loan to Valuation) with variable rates, depending on status and how long the term is.

Business loans are usually offered on Freehold and long Leasehold properties with Bricks and Mortar valuations required. Legal and valuation fees are payable by the client.

Car Loan

There are basic types of car loans available are Hire Purchase and Manufacturer’s schemes. Hire purchase car finance is arranged by a car dealership, and in essence means that you are hiring the car from the dealer until the final payment on the loan has been paid, when you receive ownership of the car, usually through a deed.

A Manufacturers’ scheme is a type of loan that is combined and advertised by the car manufacturer and can be arranged directly with them or through a local car dealership. You will not own the car until you pay back the loan in full, and the car could be repossessed if you didn’t pay your bills.

Cash Loan

Cash Loans are also known as Payday Loans, and these loans are ideal for people who hold down jobs who find themselves in a situation where they are short of immediate funds.

A Cash Loan can assist you in this situation with short-term loans, which is useful.

Loans are repayable on your next payday, although it is possible to renew your loan until further paydays down the road.

To apply for a Cash Loan you have to have a job and a bank account with a checkbook. A poor credit rating or debt history is initially not a problem.

Debt Consolidation Loan

Debt consolidation loans can give you a fresh start, allowing you to consolidate all of your loans into one simple loan, which will give you just one easy-to-manage payment, and in most cases, at a lower rate of interest.

These debt consolidation loans are secured on your home and can sweep away the pile of repayments to your credit and store cards, HP, loans and replace them with one, low cost, monthly payment that is calculated to be well within your means.

With a Debt Consolidation Loan, you can borrow up to 125% of your property value in some cases, which depends on the lender.

This type of loan can reduce your interest costs and monthly payments. Finally, you can get your life back in control.

Home Loan

A Home Loan is a loan secured on your home. You can unlock the value tied up in your property with a secured Home loan, and many people choose to do so with this kind of loan.

The loan can be used for any purpose you wish, and is available to anyone who owns a home. Home loans can be used for home improvements, buying a new car, taking a vacation, paying of credit cards and debt consolidation.

Home Improvement Loan

A Home Improvement Loan is a low-interest loan secured on the property you own, and is only for homeowners.

With a Home Improvement Loan, you can borrow money with low monthly repayments.

The loan can be repaid over any term between 5 and 25 years, depending on your available income and the amount of equity in the property that is to provide the security for the loan. You need to talk to your lender about that aspect.

A Home Improvement Loan can help you with installing a new kitchen, bathroom, extension, loft conversion, conservatory, landscaping your garden or purchasing new furniture. You can even use it on non-house expenditure like a new car or repaying credit card or other debts, which makes it convenient and useful for multi purposes.

Home Owner Loan

A Home Owner Loan is a loan secured on your home that you own. You can unlock the value tied up in your property with a secured Home Owner loan. The loan can be used for any purpose, and is available to anyone who owns their home. Home owner loans can be used for any purpose such as, home improvements, new car, luxury holiday, pay of store card or credit card debt and debt consolidation.

Payday Loan

Payday Loans also known as Cash Loans are arranged for people in employment who find themselves in a situation where they are short of immediate funds.

A Payday Loan can assist you in this situation with short-term loans to help you get through tough financial times.

Payday Loans are repayable on your next payday, although it is possible to renew your loan until subsequent paydays. To apply for a loan you have to be employed and have a bank account with a checkbook. A poor credit rating or debt history is initially not a problem.

Personal Loan

There are two categories of personal loans: secured personal loans and unsecured personal loans – See individual titles below. Homeowners can apply for a Secured personal loan (using their property as security), whereas tenants only have the option of an unsecured personal loan.

Remortgage Loan

To help you change your mortgage rate without moving, you may want to look into getting a remortgage loan. Remortgaging is the process of switching your mortgage to another lender that is offering a better deal than your current lender. This process is done to help you save money. A remortgage can also be used to raise additional finances by releasing equity in your property.

You can borrow money and rates are variable, depending on status.

Secured Loan

A secured loan is a loan that uses your home as security against the loan. Secured loans are suitable for when you are trying to raise a large amount; are having difficulty getting an unsecured loan; or, have a poor credit history. Lenders can be more flexible when it comes to secured loans, making a secured loan possible when you may have been turned down for an unsecured loan. Secured loans are another option if you need a new car, or need to make home improvements, or take that vacation. You can borrow any amount of money and repay it over any period from 5 to 25 years. You can choose a monthly payment that fits in your current circumstances and makes life easier on you.

Secured Personal Loan

A Secured Personal Loan is another useful type of loan that is secured against property. Secured personal loans are suitable for when you are trying to raise a large amount; are having difficulty getting an unsecured personal loan; or, have a poor credit history. Lenders can be more flexible when it comes to Secured personal loans, making a Secured personal loan possible when you may have been turned down for an unsecured personal loan. Secured personal loans are also worth considering if you need a new car, or need to make home improvements, or take that luxury holiday of a lifetime.

You can borrow any amount you need with a secured personal loan and repay it over any period from 5 to 25 years.

Student Loan

For students in college, a student loan is used to help students fund the cost of their education. Applications are made through a private institution or the government. A student loan is a way of receiving money to help with your living costs when you’re attending college. You start paying back the loan once you have graduated, provided your income has reached a certain level.

Tenant Loan

A tenant loan is an unsecured loan that is given to people that do not own their own property. A tenant loan is always unsecured because in most cases, if you are renting an apartment, you do not have an asset against which you can secure your loan. Tenants sometimes find that some loan companies will only lend money to homeowners, which can be frustrating. If you are a tenant you need to look for a company, bank or building society willing to give you an unsecured loan.

Unsecured Loan

An unsecured loan is a useful personal loan where the lender has no claim on a homeowner’s property should they fail to repay. Instead, the lender is relying solely on the ability of a borrower to meet their loan borrowing repayments. Because you not securing the money you are borrowing, lenders tend to limit the value of unsecured loans to protect themselves.

The repayment period will range from anywhere between six months and ten years, depending on the lender. Unsecured loans are offered by traditional financial institutions like building societies and banks but also recently by the larger supermarkets chains.

An unsecured loan can be used for almost anything you may want, from a vacation to buying a new car, funding a wedding or adding on home improvements.

An unsecured loan is ideal for those who do not own homes and cannot obtain a secured loan for example; a tenant living in rented accommodation.

Unsecured Personal Loan

An Unsecured personal loan is a useful personal loan that happens when the lender has no claim on a homeowner’s property should they fail to repay. Instead, the lender is relying solely on the ability of a borrower to meet their loan borrowing repayments.

The amount you are able to borrow with this type of loan can vary. The repayment period will range from anywhere between six months and ten years. An Unsecured personal loan can be used for almost anything – a luxury holiday, a new car, a wedding, or home improvements.

An Unsecured personal loan is ideal for people who are not homeowners and cannot get a secured loan. For example, this is a good program for renters.



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April 25, 2008

March 22, 2008

Pros And Cons Of Home Equity Loans

Andy M asked:


Home equity loan is one among the most popular home loans available today. It is a second mortgage loan with characteristic properties of a secured loan. The popularity of the home equity loan has attracted many people to home equity loan. In general, equity loans does not have arise much complaints from the people. However as any other coin, home equity loan also have two sides. Hence, the detailed analysis of the loan is essential to differentiate the features of the home equity loan. The cross analysis of the pros and cons of the home equity loan helps to avoid stepping in to the home loans with false expectations.

The pros of the home equity loans include the advantages that a borrower can enjoy from the home equity loan. The benefits of the home equity loan usually outweigh other secured and unsecured loans since it is a risk free loan for the lender. The home equity loan provides maximum amount, in proportionate to the value of the equity. For good houses situated in the real estate booming locations, home equity loan lenders used to provide high appraisal of even 125%. In most cases at least 80% appraisal is always provided. The attractive interest rate is another advantage of the home equity loans. Usually the interest rate of the home equity loan is selected in fixed rates.

Among the pros of the home equity loan, the most pronounced benefit is the tax deduction. The amount taken as home equity loan below $100,000 is exempted from the tax payment. Hence, the equity loan can be used to raise money for any purpose such as emergencies, debt consolidation, medical loan, home improvements, education or any personal reasons. The repayment schedule of the home equity loan can be conveniently selected as 10 years or more, which can be even extended up to 30 years. Moreover, the home equity loan processing has become easy and less time consuming with the introduction of internet and online lenders. The verification of the title deed and the credit score are usually the time consuming steps. However, in the online processing these verifications has become limited and the home equity loan approval is done with in minimum period of time.

However the home equity loans are not devoid of cons. One of the major cons associated with home equity loan is the risk of losing your favorite home, if you make any default in the payment. The lenders will not be bothered much about the repayment as they will be focused to foreclosure the property. Hence the borrower is advised not to take large amount as home equity loan. Home equity loan is also not advantageous for persons, who are in the beginning of their career since they cannot easily shift their position, if they have a liability. However, the people in the proximity of the pension also cannot manage a long run home equity loan. In the home equity loans, the borrowers have to keep in mind the fact that the long repayment schedule will cost you more interest. To add on, if you are unlucky the home prices will slashes down and when you are about to sell the home, it will be a loss.

In brief analysis of the pros and cons of the home equity loan, it is clear that home equity loan will be advantageous for the larger loan amount. However, you have to be careful about interest rate and other conditions involved in the deal.



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January 24, 2008

Do You Know Which Loan You Want?

David Peters asked:


Many people get confused when they hear about the different types of loans available. Here is a helpful loans guide of the most common loans available today.

Bad Credit Personal Loan

A Bad Credit Personal Loan is a loan made for people with a bad credit rating. However created, your past record of County Court Judgments, mortgage or other loan arrears can live on to deny you access to finance that other people regard as normal.

If you are a homeowner with equity in your property, a Bad Credit Personal Loan can bring that normality back to your life. Secured on your home, a Bad Credit Personal Loan can give you the freedom, for example, to do the home improvements or buy the new car you want.

With a Bad Credit Personal Loan you can borrow up to 125% of your property value in some cases.

Bridging Loan

A bridging loan is a kind of loan used to “bridge” the financial gap between monies required for your new property completion prior to your existing property having been sold.

Bridging loans are short-term loans arranged when you need to purchase a house but are can’t arrange the mortgage for some reason, such as there is a delay in selling your current home.

The beauty of bridging loans is that a bridging loan can be used to cover the financial gap when buying one property before the existing one is sold

A bridging loan can also be used to raise capital pending the sale of a property.

Bridging loans can be arranged for any sum and can be borrowed for periods from a week to up to six months.

A bridging loan is similar to a mortgage where the amount borrowed is secured on your home, but the advantage of a mortgage is that it attracts a lower interest rate.

While bridging loans are convenient, the truth is that the interest rates can be very high.

Business Loan

A business loan is designed for a wide range of small, medium and startup business needs including the purchase, refinance, expansion of a business, development loans or any type of commercial investment.

Business loans are generally available at really competitive interest rates from leading commercial loan lenders.

A business loan can be secured by all types of business property, commercial and residential properties.

Business Loans can offer up to 79% LTV (Loan to Valuation) with variable rates, depending on status and how long the term is.

Business loans are normally offered on Freehold and long Leasehold properties with Bricks and Mortar valuations required. Legal and valuation fees are payable by the client.

Car Loan

The basic types of car loans available are Hire Purchase and Manufacturer’s schemes. Hire purchase car finance is arranged by a car dealership, and in essence means that you are hiring the car from the dealer until the final payment on the loan has been paid, when ownership of the vehicle is transferred to you.

A Manufacturers’ scheme is a type of loan that is put together and advertised by the car manufacturer and can be arranged directly with them or through a local car dealership. You will not own the car until you pay back the loan in full. The car would be repossessed if you default on repayments.

Cash Loan

Cash Loans are also known as Payday Loans, and these loans are arranged for people in employment who find themselves in a situation where they are short of immediate funds.

A Cash Loan can assist you in this situation with short term loans.

Loans are repayable on your next payday, although it is possible to renew your loan until further paydays down the road.

To apply for a Cash Loan you must be in employment and have a bank account with a checkbook. A poor credit rating or debt history is initially not a problem.

Debt Consolidation Loan

Debt consolidation loans can give you a fresh start, allowing you to consolidate all of your loans into one simple loan, which will give you just one easy-to-manage payment, and in most cases, at a lower rate of interest.

Secured on your home, these debt consolidation loans can sweep away the pile of repayments to your credit and store cards, HP, loans and replace them with one, low cost, monthly payment that is calculated to be well within your means.

With a Debt Consolidation Loan, you can borrow up to 125% of your property value in some cases.

It can reduce BOTH your interest costs AND your monthly repayments, putting you back in control of the life you want to lead.

Home Loan

A Home Loan is a loan secured on your home. You can unlock the value tied up in your property with a secured Home loan, and many people choose to do so with this kind of loan.

The loan can be used for any purpose, and is available to anyone who owns their home. Home loans can be used for any purpose such as, home improvements, buying a new car, taking a vacation, paying of credit cards and debt consolidation.

Home Improvement Loan

A Home Improvement Loan is a low interest loan secured on your property.

With a Home Improvement Loan you can borrow money with low monthly repayments.

The loan can be repaid over any term between 5 and 25 years, depending on your available income and the amount of equity in the property that is to provide the security for the loan. You need to talk to your lender about that.

A Home Improvement Loan can help you with installing a new kitchen, bathroom, extension, loft conversion, conservatory, landscaping your garden or purchasing new furniture. You can even use it on non-house expenditure like a new car or repaying credit card or other debts, which makes it convenient and useful for multi purposes.

Home Owner Loan

A Home Owner Loan is a loan secured on your home that you own. You can unlock the value tied up in your property with a secured Home Owner loan. The loan can be used for any purpose, and is available to anyone who owns their home. Home owner loans can be used for any purpose such as, home improvements, new car, luxury holiday, pay of store card or credit card debt and debt consolidation.

Payday Loan

Payday Loans also known as Cash Loans are arranged for people in employment who find themselves in a situation where they are short of immediate funds.

A Payday Loan can assist you in this situation with short term loans to help you get through tough financial times.

Loans are repayable on your next payday, although it is possible to renew your loan until subsequent paydays. To apply for a loan you must be in employment and have a bank account with a checkbook. A poor credit rating or debt history is initially not a problem.

Personal Loan

There are two categories of personal loans: secured personal loans and unsecured personal loans – See individual titles below. Homeowners can apply for a Secured personal loan (using their property as security), whereas tenants only have the option of an unsecured personal loan.

Remortgage Loan

A remortgage is changing your mortgage without moving your home. Remortgaging is the process of switching your mortgage to another lender that is offering a better deal than your current lender. This process is done to help you save money. A remortgage can also be used to raise additional finances by releasing equity in your property.

You can borrow money and rates are variable, depending on status.

Secured Loan

A secured loan is a loan that uses your home as security against the loan. Secured loans are suitable for when you are trying to raise a large amount; are having difficulty getting an unsecured loan; or, have a poor credit history. Lenders can be more flexible when it comes to secured loans, making a secured loan possible when you may have been turned down for an unsecured loan. Secured loans are also worth considering if you need a new car, or need to make home improvements, or take that luxury holiday of a lifetime. You can borrow any amount of money and repay it over any period from 5 to 25 years. You simply select a monthly payment that fits in your current circumstances.

Secured Personal Loan

A Secured Personal Loan is a loan that is secured against property. Secured personal loans are suitable for when you are trying to raise a large amount; are having difficulty getting an unsecured personal loan; or, have a poor credit history. Lenders can be more flexible when it comes to Secured personal loans, making a Secured personal loan possible when you may have been turned down for an unsecured personal loan. Secured personal loans are also worth considering if you need a new car, or need to make home improvements, or take that luxury holiday of a lifetime.

You can borrow any amount you need and repay it over any period from 5 to 25 years.

Student Loan

A student loan is way of borrowing money to help with the cost of your education. Applications are made through your Local Education Authority or the government. A student loan is a way of receiving money to help with your living costs when you’re attending college. You start paying back the loan once you have finished studying, provided your income has reached a certain level.

Tenant Loan

A tenant loan is an unsecured loan granted to those that do not own their own property. A tenant loan is always unsecured because in most cases, if you are renting your accommodation, you do not have an asset against which you can secure your loan. Tenants sometimes find that some loan companies will only lend money to homeowners. If you are a tenant you need to look for a company, bank or building society willing to give you an unsecured loan.

Unsecured Loan

An unsecured loan is a personal loan where the lender has no claim on a homeowner’s property should they fail to repay. Instead, the lender is relying solely on the ability of a borrower to meet their loan borrowing repayments. Because you not securing the money you are borrowing, lenders tend to limit the value of unsecured loans.

The repayment period will range from anywhere between six months and ten years. Unsecured loans are offered by traditional financial institutions like building societies and banks but also recently by the larger supermarkets chains.

An unsecured loan can be used for almost anything – a luxury holiday, a new car, a wedding, or home improvements.

An unsecured loan is good for people who are not homeowners and cannot obtain a secured loan for example; a tenant living in rented accommodation.

Unsecured Personal Loan

An Unsecured personal loan is a personal loan where the lender has no claim on a homeowner’s property should they fail to repay. Instead, the lender is relying solely on the ability of a borrower to meet their loan borrowing repayments.

The amount you are able to borrow varies. The repayment period will range from anywhere between six months and ten years. An Unsecured personal loan can be used for almost anything – a luxury holiday, a new car, a wedding, or home improvements.

An Unsecured personal loan is good for people who are not homeowners and cannot get a secured loan. For example, this is a good program for renters.



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January 5, 2008

Loans For Every Occasion: Home Loans, Payday Loans, Student Loans And More.

Michael Talbert asked:


At some point in life, it is almost guaranteed that you will be applying for a loan of some sort. Paying cash for products and services is not only becoming obsolete, it’s terribly inconvenient. Today, credit is a way of life, and as more and more people begin to shop online, plastic is the currency accepted everywhere.

The most basic of loans is of course, the credit card. Companies that issue credit cards make money every month that you carry a balance, and they are betting on the fact that you won’t pay off the balance every month.

Some loans actually make good business sense. Why would anyone want to shell out $300,000 for a new home when they could get a Home Loan and pay $1,000.00 a month, and then deduct the interest paid from their income taxes? That three hundred grand could be put to work in other investments, and could conceivably earn more for you than you are actually paying for the house! And all that time, if you time it right, your house becomes more and more valuable.

There are also times when for many people things just aren’t going well financially. An unexpected expense occurs and you find yourself just coming up short on your living expenses. Many types of loans exist for this type of situation, both secured and unsecured.

Maybe you just need some quick cash to get through the holidays, and intend to pay the loan off within the next few pay periods. Companies offering short term Payday Loans abound both on the Internet and off. Some with no credit check will transfer up to $1,500 into your bank account within 24 hours.

Student loans, auto loans, small business loans, personal loans, home loans, second mortgages, payday loans, government loans, bad credit loans, loans to consolidate other loans – there is a loan for just about any occasion out there.

The question is how much are you going to pay for your loan? And the answer to that depends in most cases on your credit history.

Your Credit History: Weather or not you get the loan, and how much it will cost you.

It is never too early to start establishing credit, and the best way to do this is with a credit card. If you are finding it difficult to obtain a credit card because you have no history, you can always buy your history by applying for a secured credit card or line of credit. Put down $500 or $1,000 and borrow against it. Make sure the institution you are applying to reports to the major credit bureaus, use the line of credit and pay your bills on time, and voila – you have a credit history! There is nothing wrong with carrying a balance over, just pay the minimum or a bit more, and pay it on time! Creditors like to think they will be making some money off of you.

What Lenders are Looking For

While different institutions have different criteria, there are some generalizations one can make about how they determine the creditworthiness of an applicant. Make no mistake about it; creditors are in the business of making money. If your credit is less than perfect, it doesn’t necessarily mean you won’t get the loan, but you will be paying more for it!

After receiving your application, a lender will then acquire a credit report from one of the three major credit bureaus, Equifax, Trans Union, or Experian. This is your credit history. Taking into account such factors as your income, the balances in your checking and savings accounts, the assets you own, the length of time you have been at your current job and place of residence, the amount you owe other creditors, and how promptly you pay your bills, the potential lender will then make a determination on if you will get the loan, and how much they will charge you for it.

Frequent late payments, bankruptcy, repossessions, legal judgment liens, or accounts being turned over to collection agencies do not bode well for obtaining a loan. That being said, most creditors realize that life happens, and such legitimate circumstances like an unexpected illness, injury, or the loss of your job do not necessarily reflect negatively on your creditworthiness.

When Things Take a Turn for the Worse

If you are in the process of paying on a loan or loans and one of these unforeseen circumstances befall you, talk to your loan officer. Most loan institutions find it in their best interest to work with the lendee, and will often make the necessary arrangements to make it easier for you to make your payments. Just remember, they want their money, and the last thing they want is for you to default on your loan, or heaven forbid, declare bankruptcy!



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November 2, 2007

The 3 Types Of Mortgage Loans

Ricky Lim asked:


Currently on the market, there are many varieties of mortgage loans available. Sometimes it can be difficult to tell which mortgage loan is suitable and applicable to you.

I will discuss the 3 main types of mortgage loans on the market. Most banks and lenders offer mortgage loans that belong to one of these categories.

1. Fixed Mortgage Loan

Fixed mortgage loans are the most popular and common among the three types of mortgage loan.

You take out a mortgage loan with a lender and you pay a certain repayment amount for a fixed period of time. Most people usually choose 30 year fixed mortgage loans as the monthly repayment amounts are low and the interest rates usually evens out in a 30 year period.

One disadvantage of 30 year fixed mortgage loan is you have to repay more for your mortgage loan in total compared to someone who takes up a 15 or 5 year loan.

There are also shorter time periods such as 5 year, 10 or 15 years fixed mortgage loans. It allows people who want to pay off their house in a shorter period of time. Of course, you have to make sure you have the financial capability to repay higher monthly repayments.

There is also another sub-category of mortgage loan called adjustable rate mortgage loan or ARM. Usually, you will start off with a lower interest rate compared to a 30 year fixed mortgage loan. So you ended up paying less each month for your mortgage repayment.

However take note that ARM is highly fluctuating depending on interest rates. In other words, you pay less for monthly repayment when interest is low and pay more when interest rates is high.

2. Convertible Loans

Convertible loans are becoming more popular as it allows people to keep their mortgage loan options open allowing for more flexibility.

If you find interest rates are too high, you can convert to a fixed rate mortgage loan. If interest rates are low, you can also convert to ARM based mortgage loans.

There are too many varieties of convertible loans under this category. However I list one type of convertible loans I dealt with.

Balloon Loan

A balloon loan is a fixed rate convertible loan. Usually, you start off by repaying small monthly repayments for a period of years, usually 5 or 7 years. At the end of that period, you will need to repay the loan in one lump sum.

So what’s the advantage of a balloon loan? It is mostly used by investors or property dealers who are looking to sell the house in a short period of time. They can take advantage of low interest rates without locking their money on a house. Since they will have a large sum of money when they sell the house, it will not be a problem to return the lump sum.

3. Special mortgage loans

These are mortgage loans that are only being offered to a group of people. For example the FHA mortgage loans are only available for first time home buyers or people with bad credit.

Another one is the veteran affairs mortgage loan. They are only offered to widows of the US armed forces.

The best way to know whether you qualify or is suitable for a mortgage loan is to speak to a professional mortgage consultant before you decide to take up any mortgage offer



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