Warnings have been issued recently by debt counselling charities, regarding an increasing trend by some of the high street lenders to issue “charging orders” on borrowers’ homes in order to recover bad debts. Major names in loan provision such as Abbey, Alliance and Leicester, Bank of Scotland, Halifax, Lloyds TSB, Nationwide, and Northern Rock have all admitted to using these measures to turn an unsecured loan into one that is secured against the borrower’s house. When a loan is taken out, it can be either secured against the borrower’s property and should repayment defaults occur then the lender can still recover their money through the sale of the property, or it can be unsecured so that no such guarantee is offered by the borrower. Due to the obvious financial risk advantages to the lender and the much lower default rates which occur with secured loans when compared with unsecured loans, increased borrowing limits and lower interest rates are usually available for those who choose to opt for a secured loan. Charging orders are a legal means of converting a loan that has been taken out without the provision of securing that debt against your house into one where the debt is secured against your property. Having a charging order put on a house means that when the property is sold and the mortgage is cleared, any money that is then left over will automatically go to pay the remaining outstanding debt. According to Fool.co.uk this means that you “cannot sell your house until you’ve paid off your mortgage, any second mortgage and other secured loans, plus the amount due under the charging order.” It should be noted that before a court will consider an application granting a charging order, the lender must have issued a county court judgment against the debtor and the borrower must have failed to make the required payments on that judgment as agreed by the court. Also a charging order does not of itself ensure that the lender gets repayment of the outstanding debt but it does prevent the debtor from selling their property without paying what they owe. The debtor is not under any obligation to sell their property once the charging order is put in place; however, there are some extreme circumstances where it is possible for a lender to apply to a court in order to force a sale. It is very rare for the court to allow a creditor who has a Charging Order Absolute to sell your home. It is up to the court to decide whether to make an Order for Sale. Currently the number of charging orders being issued is about 35,000 per year; however this figure is gradually rising. According to the BBC, “Advisers say the practice is becoming so common that the way loans and credit cards are being marketed should change to include mortgage-style warnings that your home may be at risk if you miss repayments.” Whilst most people would agree that lenders should be able to recover the money lent, the whole point of an unsecured loan is that it will not put the borrower’s home at risk if future financial difficulties are encountered and they cannot meet the repayment schedule. Peter Tutton of the Citizens Advice highlighted that the banks are also profiting from this practice as they are still charging the higher interest rate of the unsecured debt, “lenders are kind of getting it both ways, they are getting the risk premium off the borrower, but they are getting the security of the charge and that seems unfair.” Malcolm Hurlston of the Consumer Credit Counselling Service told the BBC, that if the practice of using these orders to force unsecured loans into secured loans increases at the current rate then, “it’s something that ought to attract the attention of the Department of Trade and Industry or the Financial Services Authority.” The Financial Services Authority in turn stated that they had no authority to intervene and that it was a matter for the Department of Trade and Industry. With the current lack of regulation covering the situation, the best thing to do is prevent yourself getting into a state of affairs where you could become subject to a charge order. * Compare as many loans as possible using sites such as Moneynet * Check your own financial situation – can you afford the repayments now and do you expect to be able to meet all future payments? Using loan calculators such as can help decide whether you can afford to take out a loan. * Read through all documentation and any agreements carefully. * If you do obtain a loan, and later have financial difficulties and miss repayments, immediately speak to your lender to discuss the problem. * If your financial situation becomes serious, contact Citizens Advice or the Consumer Credit Counselling Service for free expert advice on how to proceed. Useful resources: Moneynet loan comparisons Financial Services Authority loan calculator Disclaimer: All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986. You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.
Imagine this: you’ve found the perfect house, and feel lucky because the interest rates happen to be at an all time low. So you submit your mortgage loan application, and then…wait. The next week, interest rates go up a point, but you’re still waiting. Another point would mean a significant amount in the monthly payment you will pay, and you groan when you open the newspaper and find that indeed it has gone up again. Can this be avoided? Luckily, there are some steps that you can take to speed up the process of your loan application! Here are a few suggestions. First of all, if you haven’t yet started shopping for your new home, you should consider shopping for a home LOAN before the home. It is possible to be approved for a mortgage loan before you ever find your home, and this will accomplish two things. First of all, it will allow you to lock in an interest rate, which will completely eliminate the “waiting” game mentioned above. In addition, if a seller sees that you are pre-approved, he will be more likely to negotiate with you because he will view you as a “serious” buyer. If you’ve already found your dream house and still need to get a mortgage loan approval, there are some steps that you can take to speed up the process. You should be sure that anytime the mortgage company calls you, that you return their call as soon as possible, and then provide whatever documentation or data they need. Remember, if they call you for something that generally means that they won’t be able to move forward on your loan until they receive it. Next, you can make things easier for the mortgage company by providing them with a file containing all of the information that you know they will need—organized and easy-to-read. For example, you should include your tax returns, income statements, employment records, credit reports, explanation of bad marks on your credit reports, bank and investment records, the contract for your new home, all bank records, and cancelled checks or other evidence of your current mortgage or rental payments. This will save the time of the mortgage company having to ask you for all of this paperwork. Finally, it won’t hurt to call and check the progress every now and then. Mortgage lenders process thousands of loan applications, and you can make sure that yours doesn’t sit on the bottom of the stack by calling attention to it with a phone call.
Our lives though hectic than before has become much easier and manageable as a result of solving the financial problems faster and easier and the tribute for all such huge developments goes to no one but the loans. At the moment there is an extensive range of loans that are accessible in the financial market that one does not even have to wait more than 24 working hours for getting a certain loan amount approved. Of these one such loan type that has made the most impact on and helped a number of people till now are certainly the payday loans or at times also called cash advance loans. The given name of these loans itself speaks for it and as the name payday loans suggests these are secured against the next paycheck the person will receives and therefore as well denotes you can get it without any difficulty and repay it on your payday well in time. These loans are by far the most hassle free loan plans that are available, no lengthy formalities, no papers or documents to fax in, no credit checks, no appraisals of property as it does not involve any type of collateral, apply with simple online application and the money is transferred to your checking account within 24 hours, it’s that simple. You do not have to be bothered even if you have a bad credit, since these are, provide to the bad credit holders too. So, if you have bad credit records as mentioned here like, deferred installments, arrears, bankruptcy, defaults, delayed payment or court verdicts you are still eligible. There are a few requirements to be met by aspiring individual these include, the applicant should be US citizen having an age of 18 years or more, the applicant should be employed for last 3 months with a good company, and the job should provide the applicant with a stable income of $1000 or more. In addition, the applicant should have an active checking account so that the lender can transfer the loan amount and in a similar fashion debit the bank account of the applicant when the loan has to be repaid. Payday loans are approved instantly and available for a term of 7 to 21 days and the offered loan amount ranges from $100 to $1500. Extending the date or delaying of repayment will bring about additional cash fines and for avoiding it one can alter the settlement date with his payday. The advantage of doing so is that the loan amount along with relevant fees will be debited from your bank account and transferred to the lender’s account on your payday well in time and you will be spared of heavy fines. To cut the long story short, payday loans are very easy to get and the whole approval and loan amount disbursal process is very fast. Therefore, payday loans are considered perfect for dealing with financial emergencies like paying off your utility bills to avoid disconnection, paying off mortgage payments, car repairing, medical bills or settling credit card dues.
If you want to make your mortgage more manageable by refinancing, you have two options: you can reduce your payment while lengthening the mortgage terms, or shorten the mortgage terms while paying more or less the same amount monthly. You may have observed how your adjustable home loan rate has been at its all time low in the recent years. Many people have started to resort to refinancing in order to cut down on mortgage costs. However, with refinancing, there might still be an element of risk involved. As such, some people find it wiser to shorten the mortgage payment terms instead of merely reducing monthly payments. Home refinancing is a good option for those who would like to have better control of their finances. It is an excellent way to get a better home loan rate, lower monthly payments or shorten the duration of the mortgage itself. It is undeniable how refinancing is popular mainly because it is an opportunity to lower home loan rate while at the same time get better monthly payment deals. Though shortening mortgage duration is an option when refinancing, there are not as much people who go down this road. Refinancing to Reduce Monthly Payments The benefit of refinancing in order to reduce monthly payments is obvious and self-explanatory. When you refinance, you lower your interest rate and consequently lower the amount you need to pay. Who wouldn’t want this deal? The amount you save may be used to pay off other bills, or you can save this to pay for a part of your principal. Of course, you should never fall into the lure of spending some more just because you have extra money on hand. Reduce the Life of Your Home Mortgage Refinancing can allow you to shorten your mortgage terms while maintaining your monthly payment. For example, you can lower your home loan rate by refinancing, and then reduce your mortgage life span from 20 years to 15, while maintaining the same monthly payment. It might be more difficult to see how your financial burden is lessened this way, since you still need to pay the same amount. However, if you think of it in a larger perspective and in longer term, you can see how this may be a better deal for you. You can look at it this way. Imagine a home loan rate of 5% on a 30 year mortgage. This will most likely cost you almost twice the amount that you borrowed. On the other hand, a rate of 5% on a 10 year mortgage will only cost you about 30% more of your principal as payment for interest. With the 20% difference in these two, along with the fact that you free yourself from the financial burden faster, it is easy to see how this option can generate far better deals. Needless to say, if you still find it more practical and manageable to reduce your home loan rate by reducing your monthly payments, then by all means, do so. However, if you can get by without the extra savings refinancing can provide you; it may be financially wiser to reduce your mortgage duration instead. In the end, the choice will depend on your circumstances and financial goals.
Making the decision to refinance your home may save you thousands throughout the life of a mortgage. Because of low mortgage rates, refinancing is a wise option. It’s perfect for reducing mortgage rate, locking in at a low rate, and acquiring funds for home improvement, debt consolidations, etc. However, in order to benefit the most from a refinancing, it is essential to choose a good lender. Reasons to Refinance Existing Home Loan Homeowners refinance their current mortgages for various reasons. Yet, refinancing is not always the best option. Before applying for a new home loan, carefully consider the advantages and disadvantages. Several homeowners choose to refinance because it allows them to save on their monthly mortgage payments. Sadly, many fail to consider the risk of refinancing. For starters, refinancing entails an entirely new mortgage. Hence, you must pay closing costs and a multitude of other fees. Moreover, for a refinancing to be worth your time, you should obtain an interest rate at least two percentage points below your current rate. Types of Refinancing Lenders If you are applying for a mortgage loan refinance, you have two options. Applicants may select a traditional mortgage lender – bank, credit union, mortgage company, etc. These are considered prime lenders. However, to obtain a low rate with a prime lender, you must have stellar credit. If your credit is less than perfect, refinancing with a subprime lender is a better alternative. Subprime lenders specialize in loans for people with no credit, bad credit, etc. Nonetheless, an applicant with good credit may also obtain a subprime loan. This is ideal for good credit applicants needing down payment or closing costs assistance. These lenders are useful because they offer the lowest rate possible to individuals with a poor credit history. How to Find a Good Refi Lender? Locating a good refi lender requires effort and patience. Many lenders are eager to approve your loan application. However, lenders will not necessarily have your best interest in mind. Before accepting a refi offer, obtain quotes from different lenders. Some lenders will boost interest rates or include additional fees. To avoid a shady lender, use a mortgage broker. Besides, this is the easiest way to compare lenders. After a broker receives your request, they will match you with various lenders. You are able to make a side-by-side comparison and choose the lender with the best refi loan package.
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