A solid credit record is always one of the key factors in getting a loan, especially when buying a property. Lending is a business... So, obviously credit lenders like to follow applicants presumed as "credit happy". Hence, before applying for a mortgage, one should pay off all his bills and overdrafts. Besides a good credit history, information regarding sources of income and financial obligations, such as child and spousal support debts, monthly investment statements, etc., are also vital to the lenders.
There are two types of home loan programs:
Conventional – By default, a home loan is a secured loan. However, many lenders are also offering unsecured home loans to reach out to maximum number of loan seekers
Governmental – There are a variety of governmental programs, and state and local housing plans. One should choose wisely, as each program varies by location, and has its own pros and cons - council homes, building societies, etc.
A secured home loan is cost-effective when one needs a large amount of money and can be obtained by offering something valuable as collateral. An unsecured home loan, on the other hand, is advantageous for people who are hesitant or incapable to offer collateral and have an urgent or temporary requirement. For a secured home loan, lenders offer low interest rates, negotiable repayment terms and easy loan clauses. But, for an unsecured home deal, they charge high interest rates with virtually fixed pay back terms and conditions.
On the basis of the rate of interest, home loans are categorised as:
