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[I373]Interest On Home Loan

by James Copper, Jam

Every so often you run across a situation involving credit and finances that may have a huge impact on your life. Sure, perhaps the purchase of that car you really should not have bought and are now working two jobs for so that you will be making the payments on time is a small example, but after about five or six years, this financial misstep is usually cured and you will be able to continue on with your life and hopefully learn from the experience. Yet there are some financial steps that are so fundamentally far reaching, that they may affect your entire life for up to thirty years! Co-signing on a home loan for someone else is one such step.

If you are a parent it is tempting to help your grown child purchase her or his first home. If there are grandkids involved, it is easy to rationalize that these kids need to have a house with a yard to play in and thus it only makes sense to co-sign on that home loan. Conversely, it might be your best girlfriend – with whom you made pinky promises in elementary school and who was your college roommate for four gruelling years – who is asking for help. Either way, signing on the various dotted lines is a tempting idea; you are really not losing anything, or are you?

As a matter of fact, you might be losing a lot more than you bargained for! If your grown child or best girlfriend needs a co-signer for a home loan, the odds are that their credit is not what it should be. Additionally, if their credit is not bad, then perhaps the house they want to buy is more house than they can afford. Either way, there is a reason why in today's liberal lending atmosphere the lenders are hesitant to finance them. This is a warning flag that should deter you from co-signing this home loan! Furthermore, should your grown child suddenly lose a job, or your best girlfriend be laid off, they will not have the money to make the loan payment – which does not worry the lender, because they will come to you for repayment. If you co-sign, you will be completely liable for the home loan.

In addition to the foregoing, the co-signed home loan may show up on your credit report and even if it is paid on time it may make some lenders think twice, since they see a potential liability on your record. Of course, if the borrower defaults and the lenders are suddenly coming after you for payment, this will most certainly show up on your credit report – especially if you are unable to make the payments as well. Family ties and lifelong friendships have been torn apart and ruined by co-signing on a home loan, and it is the wise parent or friend who will offer different options to the person in search of a co-signer rather than helping them to purchase a house they cannot afford.

Any credit cards, charge cards, or 'buy now pay later' cards that you don't need; get rid of them, but keep the oldest one, for the credit history attached to it. Don't be the fool who consolidates their debt only to rack it back up again while they're still paying off their debts. Get your financial house in order before getting a loan on a real one; you'll be offered better terms.

Ensure you pay off your financial products and other outstanding debts as speedily as possible. Use the money saved to pay extra on debts, if available, and stay up to date with financial outgoings, rent and bill payments.

In your research for any financial product it is advisable to review if the lending corporation is a member of the Finance Industry Standards Association (FISA), which follows the confidentiality guidelines set out for this association, and also those home loan providers registered under the Data Protection Act (DPA) who adhere to the letter of the law from the Data Protection Register.

Never borrow more than the minimum that you need! Just a few hundred quid extra could cost you half as much again over the term of your home loan!

Make a list of your income and expenditure. Then forecast your expected monthly or weekly expenses. Once you have a budget, be strict with yourself and stick to it. Try also to save some money for a rainy day as you go along. You will never know what unexpected expenses could arise, so it's better to have a backup stash for financial emergencies.

What rate do you want to pay? If you're paying the standard variable rate, you shouldn't be. There are better deals around. Anyone still paying standard rates for a variable home loan deal should look at other alternatives, as you more than likely will save thousands by simply switching to a lower rate financial product such as Basic or Discount variable home loans. Watch out for basic variable home loans that don't offer flexible features.

Getting a home loan is like buying any other consumer good; those who go the extra mile to find the best deal, or 'think outside the box', can save a lot of money. There's no need to be intimidated by all the jargon, just approach it as you would buying a second-hand car; you don't trust the vendor, and you're looking for signs it's a genuine bargain, rather than a 'pig in a poke'.

TIP: Pay an extra $10 per week or $20 per fortnight on your loan. After all, what is $10 per week? But on your long term outgoings it will save you thousands in interest. You won't miss the money day-to-day, but you will see a big decrease in your repayments over time.

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Both James Copper & Niccolo Svengali are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

James Copper has sinced written about articles on various topics from Finances, Mortgage and Mortgage. James Copper is a writer for which can give advice on dealing with. James Copper's top article generates over 1220000 views. to your Favourites.

Niccolo Svengali has sinced written about articles on various topics from Finances, Computers and The Internet and Travel and Leisure. Niccolo Svengali is a promoter for and web s. Niccolo Svengali's top article generates over 14800 views. to your Favourites.