23
Jan

How a Guarantor Home Loan Can Help You Enter the Property Market

download (20)Struggling to save enough to buy a property? You may want to ask your family if they can provide a helping hand in the form of a family guarantee loan. This is when the equity in a family member’s home is used as security on your loan.

Also known as a family pledge or guarantor home loan, it is a type of mortgage that allows you to borrow more money and provide less of a deposit. Usually when a loan is more than 80% of the purchase price (80% LVR) you will have to pay lenders mortgage insurance, but a family guarantee means you won’t have this extra expense.

It’s even possible to avoid paying any deposit because the equity in your family’s home can act as a deposit. This ‘guarantee’ makes it possible for you to borrow the full 100% cost of the home, plus stamp duty and legal fees. Lenders mortgage insurance will still be payable if you borrow over 80% of a property’s value.

There are many issues to consider when taking out family guarantees and it pays to keep in mind that loan terms and conditions can vary between lenders. Not all lenders even offer these type of loans, so give us a call and we can advise you which lenders would best suit your situation.

Here are some of the common questions we get asked about guarantor home loans. For more detailed information about any of the following, don’t hesitate to get in contact.

Does the entire loan have to be guaranteed?
No, the loan can be split, enabling the equity in your family’s property to be used as security for a small portion of the loan, for example 20%. The lender will take a mortgage out over the guarantor’s property to this specified amount.

Who can act as guarantors?
Guarantors are usually parents, but some lenders under certain conditions will accept grandparents, siblings, a de facto partner or a former spouse. To be approved by a lender they must provide enough equity to cover the amount being guaranteed and in most cases do not need to show proof of income. Normal lending criteria will apply in all circumstances.

What are the risks of a guarantor home loan?
There are risks involved, which is why it is important for the guarantor to know what they are getting into. Some lenders even require legal advice is sought to ensure the guarantor understands that if there is a default on repayments, they will be the ones held liable.

 

18
Jan

Tips for Faster Processing Of Your Bank Loans

download (18)Are you also among those facing a tough time getting your bank loan approved? With economic recession increasing at an alarming rate the bank lenders have made money lending policies more stringent. Thus, your application should be spotlessly perfect to avoid any doubts in the minds of the investors.

So, if you want lenders to review your application and grant it without creating any problems, then these guidelines should be kept in mind.

• Know your preference well: Before making a move to the bank with your application it is advisable to check all the loan options available online which are being offered by other rival companies. This would give you an idea of what kind of loan you are looking for, whether its terms and conditions are feasible for you, and time for repayment which should be as short as possible. If you are looking for some specific type of loans like an auto loan or mortgage loan then do a research work on all the deals available to get the best deal. Nowadays, you also keep getting many email notifications about several types of loans. However, one should be very careful to read its fine print properly before further proceeding with it.

• Question the bank for clarifications: Once you find the loan whose terms and conditions suit you best, you should directly get in touch with the bank officials to understand their requirements for a quick approval of the loan. As different banks have different criterions required for approval, so do not hesitate to make a prior appointment with the bank and do not forget to carry all your official documents for them to cross-check and verify. Get a clear idea about the necessary documentation requirement for the approval process so that you do not have to face any problem at the last moment.

• Know your limits: Tally your current credit scores with those required by the bank because most the lenders focus on your credit history before approving the loan. If there is any discrepancy found in that then your chances of a loan approval almost become nil.

• Checklist for required documents: Create a checklist of all the necessary documents required so as to avoid any discrepancy in the documentation process. Sometimes incomplete applications get rejected without getting reviewed, so make sure you submit all the documents.

• Get a clear idea about how things follow: Get to know how thing are processed after the submission of the application so that you know exactly when you would get a response.

 

11
Jan

The Different Requirements Of Getting A No-Income Verification Loan

download (17)A no-income verification loan’s approval depends on the creditworthiness of the borrower along with the value of the property. The lenders know that you, the borrower, cannot qualify for securing a traditional mortgage; however, they know it very well that you certainly have the ability to pay the interest on a note, which will bring them money. Because of this ability of yours, these moneylenders are able to provide you this specific loan.

And these lenders even know that if the loan is still due after one or two years, you will either replace it with a traditional mortgage (from a bank) or renew it. However, what will happen if you have a negative income, or a higher Debt-To-Income (DTI) ratio (because of some new additions in your investment portfolio), or excessive write-offs? Do not worry as despite such scenarios, you can get such financing options easily.

Getting the no-income verification mortgages

Also known as stated income loans, these financial products are the best alternative when an investor has a negative income, or has excessive write-offs, or has spiraling DTI ratios. For securing such mortgages, you will never have to furnish all those previous year’s bank statements and income tax returns.

The requirements

    • As long as you have a good credit history (600 FICO is the minimum requirement), you can get no-income loans easily (close to $ 2 million).

 

    • Apart from this, you will have to give up to 25 percent to 30 percent of purchase down payment.

 

  • The interest on this mortgage varies from one lender to another. This oscillation will completely depend on the number of docs you provide to the lender. (If you are furnishing all the docs that the lender may require giving you this specific mortgage, then the lender may even levy a low interest rate on the loan.)

The advantages of getting such loans

    • The process of getting your no-income verification loan approved is way faster than that of the traditional loan. In conventional loans, the key reason for the delay in loan funding is, many a time, related to the income verification.

 

    • This financial product implies that there is completely no need to display years of statements, to show tax returns, and to provide months of paystubs.

 

  • If you can afford giving monthly payments and 25-30 percent of down payment, getting this financial product will be your best chance to shape your commercial real estate investment dreams.

So once you are looking for a no income verification mortgage, it is best to know the information shared in this write-up. With this knowledge, you will be able to discuss your case more clearly with the representative of the institution that will lend you this mortgage type easily.

 

2
Jan

8 Conditions Which Can Result Into a Loan Rejection

download (19)Getting a loan may change someone’s life. But if an application is rejected, the dreams are shattered. And a single rejection leads to problems in the future. Though everyone fears a rejection on a loan application, only a few know the conditions due to which an application is rejected.

Bad Credit Score

Credit Information Bureau of India Limited (CIBIL) shares the credit details of an individual with all the financiers. These details include information on a borrower’s present and previous loan transactions. Banks provide all the credit information on all the borrowers to the CIBIL. Using this information CIBIL creates the CIBIL TransUnion Score and the CIBIL Score. CIBIL awards score based on the assessment of the information provided by the banks. The scores are given in the range of 300 and 900. Banks call for a CIBIL report as soon as a person applies for a loan.

Previous Defaults

Banks draw their own list of defaulters and this information is available to all their branches. This information is looked into when a person applies for a loan. This information is used in addition to the CIBIL Score and the credit report provided by the CIBIL.

Loan Guarantor

Sometimes people become a guarantor for the family members or friends. And if someone is a guarantor in case of a default then this poses a problem. The CIBIL report will show the person as a defaulter for the loan, even though the person was only a guarantor. Some will feel that this is not fair but that is how the system is. So one should be very sure while giving his/her name as a guarantor.

Too Many Loans

While lending money to an applicant the banks will add all the existing outstanding loans from all the banks or NBFCs. This helps in determining the amount an applicant is eligible for. Then the ratio of loan to income is calculated by the bank before extending a loan. The total monthly deductions should not exceed 50 per cent to 70 per cent of the take-home or gross salary.

Job Stability

An applicant’s job is an important factor too while lending the money. If the person changes job very frequently and the location too, it might be a negative point when applying for a loan. A stable employment record is very favorable when applying for a loan. The banks will have a positive outlook for people with a stable track record. The loan is given based on a good employment track record This gives the idea of stability in one’s life to the bank.

Tax Record

Banks make a thorough assessment of a tax profile by asking for the ITR copies of previous years including tax deducted at source/professional tax paid against the salary in the past. Not providing such information may lead to problems. So it is always best to obtain the income /Form 16-16 (A)/ certificate/TDS certificate from the employer.

Loan Rejections

If an applicant has been rejected in the past, the chances are high to be rejected again. So, one should be really sure while applying for a loan. It is better to check the CIBIL Score before applying. This gives a good idea of one’s probability to get a loan. Only apply when you are sure to get the loan.

RBI Defaulters/Willful Defaulters Lists

The Reserve Bank of India, RBI maintains a list of the defaulters. This list is updated by asking the bank to provide it to the RBI. The willful defaulters’ list is uploaded on the RBI’s website. The willful defaulters’ is the list of people who deliberately attempt to mislead the lenders in spite of adequate net worth.