Home Loans Under Water

Many home owners are in arrears with their home loan installments or other accounts and they would like to apply for a bond to consolidate their debt. Sometimes it seems the banks just don't want to help.

It seems that the banks want to give you an umbrella when the sun shines, but when it rains they take it away....

Take heart, there is a solution where a home owner can get a home loan even if his accounts are in arrears.

There is a company you can be referred to that will advance a sum of money to pay off your debts and then clear your record. The debts are settled within the first month and the process of removing listings from the credit bureau takes 3 - 4 months.

Then they hand your file back to your home loans broker to do a regular bond at the bank because you now have no debt and a clear record. With the bond, the company is paid back their money plus interest (that's how they make their money) and you only have your bond and car (if applicable, because they don't settle cars) to pay.

This is nothing negative on your record and is not administration or debt review - it will actually clear your record.

For more information on these types of home loans, don't hesitate to contact us by visiting our website on http://www.gpfmortgage.co.za/home-loans.html

What are Your Options to Consolidate Debt?

Should one consolidate debt in a time when interest rates are so low? Is it a good thing? The correct answer would be absolutely ‘yes’.

Why do so many people shy away from the option to consolidate debt? To answer that question we’ll discuss 2 options and what their good and bad points are.

Consolidate Debt with a Personal Loan.

If you try to consolidate your debt with a personal loan you will probably end up paying a large installment because personal loans go up to a maximum period of 5 years.

The interest on a personal loan is also much higher than a home loan. If you are not a home owner, then a personal loan is the only option you have if you want to consolidate debt.

Have a look at the various accounts you want to settle and compare that to the personal loans’ interest rate and decide if it would be worth while. As a last resort to improve monthly cash flow – add up what you want to consolidate and compare that to what the new personal loan installment will be and see if you will be better off at the end of the month.

Consolidate Debt with a Home Loan or Refinance Loan

If you are looking at using your home loan to consolidate debt it would be a wise option. This is because interest on a home loan (at time of writing this article) is only 10.5% and all other debts normally average to more than 20% p.a., so this shows you will save quite a bit per month.

You will immediately see a drastic improvement in your monthly cash flow after you consolidate debt, but remember, you should put at least half of what you now have extra into your bond account, otherwise you’ll be paying off those debts over 20 years.

So yes, by getting a loan to consolidate debt you could significantly improve your monthly cash flow, but you must look at the various interest rates and monthly installments before blindly going into it.

Click here for more information on how to consolidate debt.

2 Things a Debt Consolidation Loan is Not

Okay, so you know what a debt consolidation loan is and how it works and what it can do for you, but do you know what a debt consolidation loan is not?

It’s good to know as you will have an even better idea of what a debt consolidation loan entails.

1) A Debt Consolidation loan cannot be used to Catch Up on Arrears Payments

A Debt consolidation loan can’t be done if you are in arrears on accounts, as the bank will look at your profile and according to that they will decline it.

You need to apply for a debt consolidation loan before you fall into arrears on the mortgage or other accounts, only then will are you able to able to consolidate because your mortgage originator will be able to do a full motivation on your behalf.

What does a motivation entail? A motivation needs to be done if you are applying for more debt than you can currently afford, but it’s actually for debt consolidation.

A reputable mortgage originator would show your current situation as well as the future situation if the debt can be consolidated. You would also need to provide the latest statements or settlement letters of the debt to be consolidated.

2) A Debt Consolidation loan is not Debt Review or Administration

A Debt consolidation loan should not be confused with debt review or administration because firstly, as mentioned above, you will not be in trouble already, and secondly your debt will not be paid in monthly installments.

With debt review or administration they will negotiate with your creditors and you pay the administrator or debt counselor a monthly amount and they split it up between your creditors.

Getting a Debt consolidation loan will see the bank giving you a lump sum to settle your debt, or, if they feel it’s necessary, instruct the attorneys to settle the debts first and then give you what’s left over, if anything.

That means that you will only have your bond to pay on a monthly basis.

As you can see, now that you know what a debt consolidation loan is not, also helps you get a better picture of what it’s about and your ability to make an informed decision.

Reduction in Interest Rate

The SARB announces a half a percent cut in the repo rate.

Over-indebted South African consumers are now breathing a sigh of relief because they will now spend less per month on high interest credit cards, vehicles and personal loans, and also enjoy a reduced bond installment.

This is a very good time for you to consider a debt consolidation loan, as interest rates are at their lowest in 3 years.

For more information on debt consolidation, please visit our website on http://www.globalproperty.co.za

Why Apply For a Refinance Loan to Ease Your Financial Burden?

The individuals that have a property with equity in have an advantage when looking at consolidating debt. They have the option of applying for a refinance loan to solve their dwindling cash flow.

What is equity?

Equity is the positive difference between the market value of your property, and the outstanding bond. So if you owe less than the value of the property you have equity in your property. After you have bought a property, the normal course is that the value will increase, and your bond will decrease as you pay it off. This will increase your equity.

When the equity has increased sufficiently, you can apply for a refinance loan. This would mean you are applying for a home loan on an existing property, and thereby accessing the equity in your property.

Why apply for a refinance loan?

If you, like many others, are looking for a way to consolidate your debt, or just access additional funds, this is a good option. Since your mortgage is the “cheapest” kind of debt that you can have, you will be able to increase your cash flow tremendously. If you compare the lower interest rate and longer terms that a home loan can offer, with credit cards, personal loans or other high-interest debt you might be surprised to see the difference.

If debt consolidation is your goal, a good advice is to invest some of the additional cash you have available into your home loan. This will help you pay off your mortgage quicker, and will increase your equity again.

Since applying for a refinance loan can a daunting task, you can make use of a professional mortgage originator to assist you during this process. This will take a lot of pressure off your shoulders, and you can rest assured you will be in good hands.