Credit Crunch Looms Over Interest Only Borrowers

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While many Australians are looking forward to this new year to start afresh, there are those who dread what is to come, particularly the interest-only borrowers who are scheduled to switch to principal-and-interest repayments.

The interest-only periods of around $300bn worth of mortgages are expected to end this year, and many borrowers are left with no choice but to transfer to another lender or sell their homes amid the housing downturn. This translates to roughly 900,000 loans, or one in six mortgages, based on Australia’s $1.7bn mort According to a report in The Australian Financial Review (AFR), a borrower owing an average interest-only loan of $316,000 will need to pay an additional $400 monthly in order to meet the higher repayments. Borrowers with around $1m worth of home loans will have to pay about $880 more.

Many borrowers are faced with tight lending rules imposed by most banks. Some of those who find themselves stuck often turn to shadow banks or non-authorised deposit-taking institutions. Digital Finance Analytics principal Martin North said banks will be trying to refinance as many loans as they can, but the alternative for many buyers facing a dilemma is to seek help from these non-banks.

“It is fair to conclude that non-banks are lending like fury compared with the ADIs. But this is a big thing for the python to swallow. This is a symptom of easy non-bank funding, different capital requirements and a greater willingness to lend,” he told AFR.

However, this could potentially spur more risks ahead as borrowers who are rejected by banks often have to pay larger interest rates when they apply to non-banks.gage loan book.

 

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“The Best Comes With The Lowest” With Cheap Secured Loans

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Cheap secured loans are offered against any collateral. It could be real estate, automobiles or some other valuable assets. Generally, with cheap secured loans, the ranges of borrowed amount are from $3,000 to $75,000. But, in case of greater amount, lenders will check the worth of your collateral. If your collateral has higher value then, lenders will not only be willing to offer higher amount but also a lower interest rate. Even cheap secured loans are available for a comfortable duration of up to 25 years and you can pay off the instalments either monthly or quarterly.

Cheap secured loans however are offered at better terms and conditions that suit the borrower’s requirement. The interest rate of cheap secured loans varies from individual to individual. For a regular income earner, a lower monthly loan will help in saving a big sum of money. On the other hand, for a person whose monthly income is not stable, a loan with flexible monthly payments such as over payments, underpayments or payment holiday will be highly suitable.

Nevertheless, cheap secured loans are obtainable against your valuable collateral. And for that, in case you fail to repay that can put your collateral in danger. So, before applying, you will have to calculate the amount you want to borrow as a loan. Needless to say, should borrow the exact amount, as borrowing a larger amount may become a huge financial burden in future.

Now the question is how can you get a cheap secured loan. It is a bit tough as many lenders offer cheap secured loans to lure people. But in reality, these loans are not at all cheap. Don’t worry. With some effort, you will be able to get a cheap secured loan. First of all, list your requirement- decide the amount you want to borrow, how long would you like the repayment period to be, what amount of monthly instalment are you comfortable with.

Next step is choosing lenders. Besides traditional lenders, you can opt for online cheap secured loans. Even, finding an online cheap secured loan is easier- Just a click brings all data within a minute. And last but not the list, comparative judgement of various quotes will help you to get the best deal.

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Being Straight With Debt Counsellors

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‘Credit card debt’ is the worst of all nightmares. Credit card debt settlement is a wonderful stress relieving mechanisms. Once you are done with your credit card debt settlement, you are assured of a much better life.

You can approach credit card debt settlement in 2 ways. You can either go for credit card debt settlement all by yourself or you can take advice from a credit counselling company or a professional.

If you go for credit card debt settlement all by yourself, you will need to analyse the various options available to you e.g. checking on various balance transfer offers available in the market, checking the short term loan options with the banks etc etc. However, if you want to take credit card debt settlement advice from a professional, you should be able to trust the advisor fully. So you need to check the credentials of the credit card debt settlement advisor/company.

These credit card debt settlement companies/advisors will be able to help you in the best way if you tell them your current financial situation correctly. Your future plans are important too, as they might influence the decision on ‘What route for credit card debt settlement would work the best for you’.

Moreover, once you are done with your credit card debt settlement, you should also take measures to avoid falling into that pit again.