Loan Saver Debt Consolidation Blog

Bad Credit Loans and Paying Bad Debts

While everyone likes to turn a blind eye to credit and debt problems, they do exist; there are people who have to deal with them every day. Some people have bitten off more than they can chew; whereas others have been affected by rising costs of living mixed with rising interest rates. For some people, the only way to take care of the loans and debts that they have is to take out a loan to help pay those debts. One bigger loan can be easier to pay than multiple loans and debts especially when they are in arrears, or in default. Most creditors and lenders charge a default rate sometimes adding 4-10% interest to the existing rate, making a bad credit loan essential to getting ahead. Bad Credit Loans do exist, and exist specifically to help people who have found that they are having trouble with debt. Applying for loans to pay off bad debts can be confusing, however. There is a simple way to go about using bad credit loans.

Understand Your Debt and your Credit

The first step in using a loan to pay off bad debts is to understand exactly where you stand. If you are looking for bad credit loans, you should be transparently informed of your current situation. You should know how much you owe each creditor, how far in default you are, and how much interest you are paying, and if a creditor has listed your default with a credit reporting agency . By knowing all of the numbers and information, you are better suited to know if a bad credit loan will put you into a better situation.

Find a Company That Will Give you a Loan

The next step is to find companies that are willing to provide bad credit loans. By knowing what companies offer bad credit loans and what ones do not, you can help yourself save time through applying with the right company first time. The best way to find the right company is through the use of a Mortgage or Loan Broker, they have years of industry and product knowledge that can save an enormous amount of time in the application and loan research process.

The Bad Credit Loan Application Process

The application process is just as important as the research and information gathering process. When applying for a Bad Credit Loan; lenders require a list of documentation to be submitted with the loan application. This includes 100 points of Identification, a list of assets and liabilities, a copy of your credit report and a list of the outstanding debts you are looking to pay. All this information needs to verified using documentation. Once this information is put together, the lender assesses the information against their loan policies. If you, or you and your Loan Broker has done the right job an approval should be on the way.

Use the Money on Debt

Bad Credit Loans may be a little more difficult to find, but they are available. If you make sure that you know what you are getting into and what you need, they can be a good solution to a bad situation. By being careful and patient, you may find the help you need to remove your financial stress and regain your life.

Things to Consider with a Home Loan in Default

A home loan default can be one of the most stressful and difficult things for home owners to go through, and is usually the result of some form of disastrous life event. This event may be a Divorce, sickness, loss of a job or income, or even a death in the family causing the financial troubles. Mortgage companies are in the business of providing loans; not taking properties, and can often work with those who have a mortgage default to get them back on track. By knowing what to consider when it comes to home loan default issues, you can know exactly where you stand, and can begin the process of getting out of default and into good standing with your mortgage.

How long have you been in Home Loan Default?

The first thing to work out is the length of time that you have been dealing with a Home Loan Default. A lender may only allow a default to last for a few months before proceeding to foreclose on your property. The longer you are in default; the more you will have to pay to bring the arrears up to date and pay the legal expenses.

What is the Cost to Get Out of a Home Loan Default

The cost to bring your home loan default back to normal will usually require paying the entire payments that have been missed. Some companies are willing to work with you to help you make the payments; and often require a larger initial payment on the missed payments, and then increase the monthly payments to make up the difference. While this can be more of a financial burden, this is a great way to get out of home loan default. The only way to really know the exact $$$$ value of your home loan default is to ask your lender, as there may be legal and other expenses you will need to pay. Knowing the exact cost will allow you to form a plan to pay it off.

How Much Time do you have to get out of a Home Loan Default?

This will be dependent on your lender and you will need to speak to them to find out. If your default has been there for over 3 months your lender may require the full debt to be recalled. Which means you will need to pay for your whole loan, not just the arrears. The only way to determine this is to discuss your options with your lender.

Once your home loan is in default the timer is ticking away. Generally you will have 3-6 months before legal action is taken to seize your property.

The best method in these circumstances is to recruit the services of a professional who works with Home Loans in default, as they may be able to negotiate a satisfactory settlement of your home loan; this may entail be negotiating with your lender to keep your debt, or to refinance to another company.

Top Causes of Credit Default

Your credit file is one of your most valuable assets; which needs to be protected. An adverse credit rating by receiving a credit default can impact you applications for credit for 5-7 years. Most people don’t realise the impact of receiving a credit default until it’s too late. A credit default can impact your applications for any credit such as obtaining phone or internet accounts, or even various other home or business services. A credit default is something that can be avoided by simply understanding why people have issues, and how they can be avoided. By being more informed about people who deal with a credit default, you can help to make sure that you do not find yourself in the same situation. While there are seemingly endless causes for a credit default, there are three major causes. Know these, as it can help you avoid a credit default.

Unknown Missed Payments

Many people only realise they have a Credit Default when they are declined for some form of credit. There has been a credit default listed on their Credit Report and it has resulted in the decline. They may not even have any had any financial issues, but may have only mismanaged a bill or a service or phone contract. You may think your bill has been taken care of by closing the account; but if you cancel a contract early you may still have cancelation fees payable. It is quite common for the fees to cancelled a telephone contract to be anywhere from $2000 to $3000. The Phone contract will at times include the cost of the mobile handset, which can run into thousands of dollars. Other instances where a credit default is listed can be where a person has moved house, and there is an outstanding amount owing from a phone or service bill.

Known Missed Payments

Some people, however, are completely aware they are facing credit defaults, but they are facing financial hardship and struggling to make their commitments. People do not simply decide to not pay their bills, it is a result of some other circumstance that puts them into this situation. The various situations that may put you at risk are:

• Divorce
• Sickness or inability to work.
• Loss of a job
• Failed Business

In these situations there is usually a loss of an income, but in the case of divorce there is an emotionally devastating event that affects how a person operates in their everyday life. There may be a change in living situation for both parties with a breakdown in communication, a ripe situation to cause a credit default.

Over committed by high interest debts

Over the last few years many people have applied for and received loans they could barely afford. As first home buyers they may need to spend money on buying furniture and getting their house in order and hence get themselves into large amounts of unsecured, high interest debt. A combination of credit cards, personal loans and a loss of an income can be devastating for a dual income family. The loss of an income in these circumstances can be from the birth of a baby, or a sickness, or loss of a job.

Being informed and knowing about the causes of credit defaults can help you to keep yourself from receiving a credit default.

Benefits of using a Mortgage Calculator

A Mortgage calculator can be crucial for people who are looking into buying a home. While it is nice to think that people can buy a house without having to deal with a mortgage, most people who buy a home require a loan. The numbers and equations in obtaining a mortgage are enough to confuse anyone. Many people simply talk to their mortgage broker or the lender to try to figure out exactly how much a mortgage will cost them. There is a way to be informed on the mortgage as a first step to making any decisions. By using a mortgage calculator, you can figure your payments and basic costs. There are various calculators which can help you in any number of calculations.

What Calculators are available?

There are calculators available for almost any purpose you can imagine, below is a basic list available for mortgage purposes.

• Debt Consolidation Calculator – Work out the benefits of consolidating your debts.
• Cost Calculator – Work out how much it’s going to cost you to buy your house.
• Repayment Calculator – What are your repayments going to be?
• Borrowing Calculator – How much will a lender offer you? This is usually a very general calculator. The only definitive way to assess this is the speak to your lender or mortgage broker.
• There are also calculators for car loans, calculating balloon payments, the effect of extra repayment, lump sum repayments and many other purposes.

Know What You Can Afford

The first major benefit of a mortgage calculator is the ability to figure out exactly what you can afford. While many people can understand what they can afford as far as monthly payments are concerned, they are unsure how interest and everything plays into the numbers. The mortgage calculator gives you the luxury of playing with the interest rate, amount of deposit, and loan term to figure out what you can afford, and how to arrive at the loan amount that you can afford.

Know What Small Changes Do to your Payment

The next benefit is the simple idea that the mortgage calculator allows you to play with the numbers at will to understand exactly how changes affect your monthly payment. By playing with the different numbers you can figure out the best way to get what you want in a realistic way.

Know your Price Range

When buying a house people often find they are unsure of how much they can afford. How does Interest rate or deposit impact the price they can afford to pay for a house? What is the maximum purchase price? Some people believe they can pay a certain amount, but can actually pay more. Being informed will allow you to buy better and give you an advantage when negotiating with the vendor.

Do Mortgage Calculators have limitations?

Mortgage calculators are a fantastic resource as a first step to securing a mortgage or buying a house. The simple nature of a calculator is also its greatest limitation; there are many factors to consider in obtaining a mortgage that a calculator does not cover. For example, a calculator does not look into your credit worthiness or the impact a credit default has on the interest rate, or the amount you can afford. It also does not consider or have the ability to work out exact loan costs for your particular situation. A Mortgage Calculator should be viewed as a first step asset to obtaining a mortgage, but know they have their limitations.

Summary

When using a mortgage calculator, you can begin to educate yourself on what you can afford the basic costs and the benefits of various loan situations. You can have ready access to online calculators or even computer based calculators without dealing with a lenders sales pitch. Calculators are great as a first step to obtaining a loan or a mortgage, but know the limitations. Where possible make a call to a mortgage broker or a lender as the next informed step to obtaining a mortgage. When trying to restructure a mortgage, or to entering into a new one, the mortgage calculator can help you understand what you can do, and what you cannot afford.

Benefits of Consolidating Unsecured Debt to your Mortgage

Trying to have a hold on all of your debt can be difficult at the best of times. You may have multiple loans and debts for multiple reasons; debt consolidation can help reduce your overall repayment and manage your debt more effectively. Debt consolidation is simple; it brings all of the debt together under one single loan. Many people consolidate their loan into their mortgage, making it easier to bring it all together. There are multiple benefits to bringing all debt into one, but there are four major benefits of consolidating unsecured debt to your mortgage.

Does the Interest Rate make a difference?

By using Debt Consolidation, you can actually lower your overall interest rate that you are paying. The idea is that you are moving all of your debt to one location; this often requires the need to re-configure and restructure an existing loan. If you consolidate your loans, certain debts may be a lower interest rate because the new interest rate is better than the old one. While this may not happen with all debts, just because the new loan is being stretched over a longer period may reduce the repayment and hence make the loan more manageable. For example:

• The repayment on a $20,000 loan at 11% over 3 years is $652 per month. If this loan was consolidated into a 30 year mortgage with the same interest rate the repayment would be $190 each month. Effectively releasing cash flow of $462 each month.

The above example shows how people can get a handle on their finances. It could help you afford your monthly payments, where you may not have been able to as separate debts.

Why use a Mortgage to secure the debt?

The loan options available to consolidate your debt are using a Secured Consolidation Loan or an Unsecured Consolidation Loan. When a lender has security against a loan product they will offer you a higher loan amount and a better interest rate. Both these features allow a better result when consolidating your debts. A low loan amount may prevent you from consolidating all of your debts. At times this may prevent you from obtaining a Debt Consolidation Loan all together.

Convenience and Simplicity

The most exciting benefit of debt consolidation, however, is the simple convenience factor. By consolidating your debts, you are bringing all of your debt into one place. Many people often have 3, 4, or 5 loans and sometimes up to 10 loans; this can be very difficult to manage and keep all of your loan agreements. Paying one lender, with one interest rate, and one monthly payment can make your finances significantly simpler to manage.

Conclusion

Many people bring their loans together through debt consolidation as a way to make their lives easier and simpler; debt is never fun for anyone, but debt consolidation allows you to manage your debt more effectively and take control. Consolidation can allow for lower monthly payments, and the convenience of having it all in one place. Consolidating your debt into a mortgage is an even better way to bring everything together under one roof; and make your debt work for you a little more.