Mortgage Financing

Unsecured Loans and Mortgages 

Getting a mortgage will help you realize your dream of owning a home. However, getting a mortgage can be difficult especially if your credit scores are not good. Banks also have strict lending standards that could deter many people from borrowing. However, if you’re determined to own your home and feel that you can be able to make the mortgage payments, it is important to take some aspects into consideration. Although, don’t forget that personal, unsecured loans are always a choice if you are able to repay them in the long run. 

We will highlight these and hopefully, you can realize your dream of owning your home.

Get a mortgage that suits your financial situation

 Buying a home gives you equity and you can also enjoy tax benefits. You, therefore, have to be very careful about what your mortgage terms and conditions are. For example, you will get a higher starting rate with a fixed-rate mortgage but you are sure that your monthly repayments will remain the same. If however, you get an adjustable mortgage, the interest normally starts lower but may spike depending on how the market situation is. This can lead to frustration because you cannot predict and properly plan for the higher interest rates.

 Lenders will look at your debt to income ratio because it will give a good indication of whether you are comfortable in making the monthly payments. If your debt level is very high and your income is low then you will not be a good candidate for loans. Before applying, make sure that you reduce the number of loans you have, and if possible consolidate them so that you make lower monthly payments.

Cash-back mortgage -consider additional expenses – unsecured loans 

When buying a home there are plenty of additional expenses. For example, taxation, transfer fees, innovation fees, purchasing of furniture and other home equipment. You may find that you are not able to do these things because of lack of money. Some mortgage lenders offer the cash-back option. This means that you can get a percentage of your mortgage amount once you make the down payment. The rates vary depending on the lender and will range between 1 to 7%. However, you need to know that you will be paying a higher interest rate on cash-back loans. This could sometimes be as high as 2% above the standard mortgage rate. But if you aren’t eligible for a cash-back mortgage don’t get worried and stressed. Although, you have no need to worry as personal, unsecured loans are available to help you.

Unsecured loans tend to range from £1,000 to £35,000. This is to help you afford necessities exactly when you need them.

Try to consider holding off on these expenses until you can use your own savings.  This is not to say that cash-back loans are a bad idea if you can afford them. But just be clear that you can pay them back as required by the lenders.

Be careful about your borrowing

Being unable to repay can cause serious money issues. This will negatively impact your credit rating, making it hard for you to access funding in the future. A bad credit score will also impact on the interest rate the lenders will charge you. Those with poor credit ratings are present a risk of defaulting and banks, therefore, apply higher interest rates as a way of protecting themselves in case of defaults.

 Try as much as possible to slow down on the number of loans you take and only take what you can comfortably service.

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