Tag cashback loans

A review of cash-back loans

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Cashback Loans

A cash-back loan enables new homeowners to take care of additional expenses that may arise with the purchase of the home. You may find that you need to do some repairs in the home, buy furniture, and pay expenses like taxes or transfers fees amongst others.

 The cash-back is usually a percentage of the principal mortgage amount and you get the amount when you make a down payment on the loan. You will pay back the loan at a higher interest rate than the standard mortgage interest rates. If you refinance or transfer the loan you will lose the benefit of the cash-back because the lender may decide to withdraw the offer.

What are the benefits of a cashback loan?

The benefits we will highlight below may not necessarily apply to all lenders because the terms and conditions vary depending on the company you are getting the loan from. Some of these benefits include:-

No credit check

 Cash-back loans use your bank and employee information to determine if you are creditworthy. As long as you demonstrate that you can pay the loans, you will qualify for the short term loan.

  Easy application process

 Cash-back loans do not take a long time to apply and some banks have the facility online. This means that in a few minutes you could get approval for the amount you wish to get.

Quick turnaround

 Depending on where you apply for the loan from, the turnaround does not take a long time. Some turnaround times are so fast that within a few minutes you will know whether you have approval or not and can collect your money almost immediately.

 Additional fees are clear.

There are some fees you need to consider when applying for a loan and the lenders are usually very clear on what they are. Make sure you have a clear understanding of what these fees are and what it will mean for the overall amount of money you’ll end up paying.

 What do you need to consider when thinking about a cashback loan?

High costs

 Banks charge a higher interest rate on cash-back mortgage. If you can do without the loan, then you may be better off not applying for it. If however, you cannot do without it, just to be clear that you need to pay back a larger amount than you would on a standard mortgage.

Loss of collateral

 Bad credit loans use collateral to secure the loan. This means that if you’re not able to pay, you will end up losing that collateral, whether it is a house, a car, or equipment.

Final thoughts on a loan 

Some people would question whether cash-back loans are safe to take. Just like a mortgage, cash backs have terms and conditions and you need to know what they are so that you do not get any nasty surprises somewhere along the line. You need to know that you will pay back higher interest rates and there are penalties that you may face if you do not adhere to the terms and conditions.

Additional Information on a loan

If you don’t like the idea of a secured loan, why not try an unsecured loan? This is where won’t end up losing your home, car or equipment if you are unable to repay.  

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Previous post: Pros and Cons of cashback loans – click here to read.

Frequently asked questions about cash-back mortgage

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Frequently asked questions about cash-back mortgage

Loan Alternative 

Firstly, if you understand cash-back mortgages and are looking for an alternative, perhaps a loan is the best option for you. Whether it be a personal, unsecured loan or secured loan, there are endless reasons why they are useful.  

You may have had about cash-back mortgage but you are not very clear about what it is. Use our FAQs below to get a better understanding of what cash-back mortgage is.

What is cashback Mortgage?

 Anyone who has bought a home will tell you how expensive and financially draining it can be. Once you’re done with the payments, you will realize that there are some expenses that may arise that you had not initially thought of. Lenders are privy to this information and will offer you the cash-back mortgage as a way of helping you have money that you can use for such expenses.  They will calculate the cash-back rate using the principal amount as the basis. Depending on the lender you can get between 1 to 7% of the mortgage amount.

Who is a cash-back mortgage broker?

A cash-back mortgage broker is a regular home broker, but one who can negotiate cash-back terms with lenders. It is important to realize that not all lenders give cash-back mortgages, and this means that not all brokers know how to negotiate this. If you know you may require the cash-back option, you may need to look for a mortgage broker who has experience in this field.

Are cash-back rates competitive?

 Most lenders will tell you upfront that the interest rates you will pay on cash-back are higher than the standard interest you pay on a mortgage loan. The rates vary from lender to lender and usually range between 1 to 7% of the principal amount paid.

When taking cash-back loans, you should always consider the overall cost that you will end up paying. There are mortgage calculator tools you can use, but it would behoove you to use a mortgage broker who will be able to negotiate for you the best rates.

What is the main advantage of taking cash-back loans?

Cash-back loans are taken because you do not have the money to complete a project you might need to do in a newly purchased home. This is, therefore, the main advantage of cash-back loans. It gives you a lump sum that you can use for whatever expenses that may have arisen with the purchase of your home.

 What is the main disadvantage of taking cash-back loans?

The main disadvantage of taking cash-back loans is that you will be getting yourself deeper into debt and will have to contend with the higher interest rates. The accessibility also makes people take loans that they may not necessarily need. Some repairs or purchasing of furniture can wait for a period of time as you recover financially, however, with the lure of quick money people find that they will take the loans which they will have to pay back.

 What penalties can one incur if they’re unable to pay back the cash-back loans?

 If you had collateral, you will lose them to the bank because they will sell them to recover their money. Cash-back loans are also very rigid when it comes to refinancing or lump sum payment of the amount borrowed.  Be very clear about the terms and conditions on the penalties you will incur in case of anything.

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Previous Post: Click here to read the more about cashback loans. 

How to get mortgage financing

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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Previous Post: Learn more about cash-back mortgages here.