The concept of debt consolidation is very attractive when there is a large amount of debt. The attraction is the potential of reducing your outgoing payments and improve your lifestyle.
However, not all situations are suitable, or more often, able to use debt consolidation loans to reduce outgoing payments. Lenders have a multitude of policies designed to ensure that borrowed money is secure.
The issues may result from:
- insufficient security for the loan. The new loan excedes the value of the security.
- the loanamount is too high for the lender to feel comfortable.
- income servicing is insifficient or the oncome isn’t accepted.
- the loans to be consolidated aren’t conducted well.
- credit defaultsIn these circumstances its advisable to discuss the dituatipn with your financier. Not all lenders ate the same. If you need assistance, or someone to discuss you situation, feel free to contact Colin from Loan Saver Network or Apply for a Loan.
Once your debt consolidation has been finalised, the next step is to look at your savings accounts and how your money flows. Setting up your accounts properly can prevent the feast and famine approach to managing bills, mortgage and other loan payments. The feast and famine approach is where the cyclical nature of bills ie quarterly electricity and gas, annual rates, etc. causes periods of no bills and over spending, then being low on funds to pay when the accounts arrive. Here are some tips to smoothing out your cash flow:
1. Calculated (or approximate) your annual cost for all your bills then divide by 12 months and set the monthly figure to be paid to the respective accounts. Add a small amount and over time you will be further in front and can usually obtain bettrr discounts on bills.
2. Do not have the billers draw the payment from your account. You should setup auto pays so they can be turned off as required. Failed payments can be expensive with fees by the billet and your bank. When your low on funds turn the auto payment off and inform the billet you will pay at a later date.
3. Arrange your home loan payment to come out of a single account (account 1) with no other direct debits - this is so no surprise direct debits or auto payments cause a mortgage payment to be missed.
4. Set up your wage into a seperate savings account (account 2) where the direct payments for bills are paid.
5. Auto pay the mortgage payment from the wages account (account 2) (+$100) into account 1.
This structure may seem complicated but is very simple once set up. All you need to do is monitor the money going in. The effect of this structure is amazing. You will never feel the stress of a large bill again.
If you would like to discuss this structure further, feel free to call Colin at 1300 796 870, or Apply for a Loan for more information on our Debt Consolidation Loans.
Debt Consolidation Home Loan - As the wording describes it is utilising your home loan to consolidate debt. Though as is always the case, its not as easy and simple as it sounds. Each client scenario is completely different which keeps us on our toes, and is one of the reason why we love what we do. Firstly, i will start by saying all loan products are not the same, and the interest rate and fees associated can vary dramatically. The reason for this is one of the fundamental questions nobody every really thinks of - Where does the money come from? With the recent issues concerning the GFC (Global Financial Crisis) manay people have begun to realise the money for you loans comes from some one or a corporation somewhere. These entities purpose is profit and investment return. Therefore wholesale interest rate and fee for risk is where the profits are made, and then there is the delivery costs such as the lenders fees and risk insurance. Now, moving onto a simple Debt Consolidation Home loan - I will start by looking at interest rate. Interest rate for a debt consolidation home loan can vary drastically, with various products having differences in interest rate sometimes up to 4% or more. This is becuase the investor want a return based on the risk in lending the money to you. The investor does not know you from any other of the million of people applying for a loan. Therefore they will look at a range of circumstances they will lend for. For example - refinancing bad debts equals high risk as the funder does not really know if the applicant has moved past their habit, or financial predicament so they will charge a premium for lending the money. The next purpose is to consolidate 2 credit cards, the client has been employed in the same job for 5 years, never late on any mortgage payments, and never over limit on their credit cards or any personal loans - this client presents a low risk client and appeals to the investor who is happy with a lower safer return.
We use all our skills to find the best interest rate and fees for your particular purpose. If the loan isn’t packaged the right way, you may appeal only to an investor who is attracted to higher riskier returns. Packaging your application in the right way and pushing for the small detail to be viewed in the right context is our specialty, and can make all the difference toachieving a better product for your circumstances. Since the GFC the gap between Prime Loans such as the everyday Big 4 loans, and loans for the Credit Impaired has widened considerably. Non Conforming or Debt Consolidation Home Loan Lending has become more specialised than it has ever been. The average broker simply does not have the expertise to obtain the most competetive interest rate and fees structure. If you have any further questions, please feel free to call us on 1300 796 850 for an obligation free proposal. Obligation free, funny term, but if you read our previous posts we will give you an assessment and provide you directions for your needs. If this involves directing you elsewhere, we will do that. If we believe we can offer you a solution, we will not waste yours or our time by giving incorrect, misguided, or false information. Call us on 1300 796 850 or Apply for a Loan.
When you have credit defaults or some other form of loan or credit impairement there are still available options to refinance. Bad Credit Refinance and the general refinancing processes are very similar, with only a few detailed but significant differences.
- The Story - There is alot of weight put on what caused the issues and if the issues are now past. Would the Bad Credit Refinance rectify the issues if the loan was placed. For example, if the issues were caused through an illness the lender will want to see you are now well again. When you still involved in the issue it can be difficult to see how the issues unfolded.
- LVR - the ratio of lend against the property value plays a large part in having the lender feel secure in providing funds for a Bad Credit Refinance.
- Income - Each lender views income in different ways. Some willa ccept short term employment, some will acceptunstable incomes. Choosing the right lender is important for a rapid Bad Credit Refinance.
Loan Saver Network will look at your individual circumstance to identify an appropriate course of action to effect a Bad Credit Refinance. See Bad Credit Mortgage for information on the types of Loans available, otherwise Apply for a Loan below.