home loan – Flight 93 http://flight93.org/ Sun, 20 Mar 2022 22:40:48 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://flight93.org/wp-content/uploads/2021/07/icon-5-150x150.png home loan – Flight 93 http://flight93.org/ 32 32 Does the mortgage overdraft benefit all borrowers? https://flight93.org/does-the-mortgage-overdraft-benefit-all-borrowers/ Sun, 20 Mar 2022 18:47:26 +0000 https://flight93.org/does-the-mortgage-overdraft-benefit-all-borrowers/ Mortgage overdraft (OD) is a form of home loan that combines the overdraft facility with a standard home loan. The facility can make servicing a home loan much more convenient for borrowers by allowing them to make unlimited prepayments and giving them access to a larger line of credit in case of an emergency. Additionally, […]]]>

Mortgage overdraft (OD) is a form of home loan that combines the overdraft facility with a standard home loan. The facility can make servicing a home loan much more convenient for borrowers by allowing them to make unlimited prepayments and giving them access to a larger line of credit in case of an emergency. Additionally, the facility can help borrowers reduce their interest expense by reducing the outstanding principal in a flexible manner.

How it works

In a home loan overdraft facility, a lender opens a savings account or checking account that is linked to the home loan account. This account is designated to accommodate deposits made by you and subsequent withdrawals requested from your side.

Under the facility, any excess you deposit is considered by the lenders as a prepayment of the principal amount. Similar to the regular home loan, the interest on the overdraft loan is also calculated based on the outstanding principal of the loan amount.

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However, the interest is calculated on a daily basis and varies according to the outstanding principal each day. Depositing additional funds into the overdraft account reduces the interest you end up paying and the term of your loan. However, the IME remains unchanged.

Apart from the prepayment, the overdraft scheme provides liquidity from the account whenever there is a financial need. The amount and duration of the loan are adjusted accordingly. Thus, this scheme doubles as an early repayment option and a liquidity avenue. However, before opting for this option, keep in mind that any increase in the outstanding home loan balance may increase interest outflows and there may be a cap on how much you can borrow from the account. discovered.

Adhil Shetty, CEO of BankBazaar.com, said that when you decide to opt into a home loan overdraft program, your lender will link your home loan account to your checking or savings account. The monthly equivalent payment (EMI) you pay each month to service your home loan goes into this home loan account. You prepay your home loan whenever you deposit additional funds above your usual EMI. This prepayment reduces the outstanding amount of your loan and lowers the applicable interest rate. “So basically if you have an amount in your savings bank account, you can transfer it to your home loan account to pay off your loan faster,” Shetty said.

You can also withdraw money from the overdraft account at any time, as it is linked to your checking or savings account. You can also transfer money from this account to your other savings account, if needed. The overdraft account acts like a loan approved by the lender. Each time you withdraw from the overdrawn account, the repayment term is realigned with the outstanding principal amount. The interest charged on the direct debit is the same as that of the overdraft mortgage.

Shetty said: “The process of withdrawing money is the same as depositing additional funds into your home loan account. Keep in mind that withdrawals may increase the outstanding loan amount, which you would be required to repay with interest.”

Raj Khosla, Founder and MD MyMoneyMantra.com, said: “The interest rate charged on advances made through the Home Loan Overdraft Facility is a notch higher than the interest rate charged on a regular home loan. Typically, the rate differential could be between 20 and 50 basis points.”

Limitations: This can be an expensive option for you, as the interest rates are usually higher than the usual interest rates on your home loan. Ratan Chaudhary, Head of Paisabazaar.com Home Loans, said, “Because the home loan savings option offers higher liquidity and flexibility than regular home loans, banks and housing finance companies typically charge slightly higher interest rates for this facility.”

Shetty said: “The Home Loan Overdraft Facility does not provide the benefit of the Section 80C tax deduction for the prepayment of home loan principal. This is because additional funds deposited into the home loan account with the overdraft facility are not considered a repayment of principal from a tax perspective.”

Who should choose it?

Experts suggest that a mortgage overdraft can be a good option for a businessman with seasonal receivables and debts. Having an overdraft account on hand can help you when you need cash immediately and when you have excess short-term cash. Khosla says, “Salaried people with a higher income and an expectation of large percentage increases in their respective annual income can also benefit from an overdraft on a home loan, creating an opportunity fund for themselves. Moreover, they can also prepay the amount before the end of the term and can save a significant portion of the interest charges. »

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A home loan overdraft is suitable for those who seek flexibility and are willing to accept higher interest rates and loss of tax benefit. If you are considering opting for this scheme, you must first do a cost-benefit analysis to understand its implications on your actual savings.

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What is Deferred Financing for Cash Buyers? https://flight93.org/what-is-deferred-financing-for-cash-buyers/ Fri, 18 Mar 2022 14:50:52 +0000 https://flight93.org/what-is-deferred-financing-for-cash-buyers/ Why go into debt when your house is paid off? While it’s always attractive to pay off debt and keep it, mortgage debt is often considered good debt because, over time, it can increase your wealth. Low interest rates Today’s mortgage rates at the time of writing this report sit at just over 4% for […]]]>

Why go into debt when your house is paid off?

While it’s always attractive to pay off debt and keep it, mortgage debt is often considered good debt because, over time, it can increase your wealth.

Low interest rates

Today’s mortgage rates at the time of writing this report sit at just over 4% for a 30-year fixed rate mortgage. In contrast, 20 years ago, the best rate you could have gotten would have been just under 7%.

In this low interest rate environment, doesn’t it make sense to get most of your money back, get a mortgage to buy your house, and find another use for your savings? How about investing that money? What if you had major renovations in mind for your new home?

Create credit

It may seem counterintuitive, but having no debt is not the key to being a good credit risk. In fact, it’s probably going to hurt you when it comes time to get a mortgage.

By having mortgage debt and paying it off faithfully and on time, you are building a favorable credit history. In the future, when you need a loan, it will be available to you, and at the lowest possible rates.

It is important to note that it will be helpful to have a pre-existing credit history with credit cards, personal, student or auto loans before getting a mortgage. Your home loan is just one more thing that helps add to your story.

Use of credit

Having a solid debt repayment history is just one factor lenders look at when assessing your creditworthiness. Another factor they take into account is your credit utilization rate, which is the amount of credit you are actually using at any given time. Lenders like to see that you know how to manage your credit.

Cash or cash available to invest

If you are an investor or would like to become one, you know the importance of having cash on hand. Although mortgage rates are low and the stock market and real estate investments offer the potential for high returns, it makes more sense to get your money out of your home and use it to build your investment portfolio.

When considering an investment strategy, be sure to assess your risk tolerance and balance your portfolio periodically to mitigate risk.

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Would you like to benefit from tax advantages on affordable housing? You have little time left to sanction a mortgage https://flight93.org/would-you-like-to-benefit-from-tax-advantages-on-affordable-housing-you-have-little-time-left-to-sanction-a-mortgage/ Mon, 14 Mar 2022 18:18:22 +0000 https://flight93.org/would-you-like-to-benefit-from-tax-advantages-on-affordable-housing-you-have-little-time-left-to-sanction-a-mortgage/ By fulfilling the u/s 80EEA conditions, a home buyer can obtain a deduction of up to Rs 3.5 lakh (Rs 2 lakh u/s 24 and Rs 1.5 lakh u/s 80EEA) on interest paid on the home loan. In addition to getting a deduction of up to Rs 2 lakh from taxable income under Section 24 […]]]>

By fulfilling the u/s 80EEA conditions, a home buyer can obtain a deduction of up to Rs 3.5 lakh (Rs 2 lakh u/s 24 and Rs 1.5 lakh u/s 80EEA) on interest paid on the home loan.

In addition to getting a deduction of up to Rs 2 lakh from taxable income under Section 24 of the Income Tax Act, buyers of affordable housing are eligible for the additional tax deduction of Rs 1 .5 lakh under Section 80 EEA – provided that the value of the property of the house must not exceed Rs 45 lakh and the carpet area of ​​the property of the house must not exceed 60 square meters (645 square feet) in the metropolitan cities of Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (entire Mumbai metropolitan area), while in all other cities or towns, the carpet area should not exceed 90 square meters (968 square feet).

So, by fulfilling the u/s 80EEA conditions, a home buyer can get a deduction of up to Rs 3.5 lakh (Rs 2 lakh u/s 24 and Rs 1.5 lakh u/s 80EEA) on interest paid on the home loan. However, unless further extended, the benefit can only be used on home loans sanctioned on or before March 31, 2022.

“Thus, from the start of 1 April 2022, buyers would no longer be eligible for the additional tax benefit of Rs 1.5 lakh under Section 80 EEA of the Income Tax Act 1960 , which is currently available for affordable housing. So if you’re looking to buy a home that meets the Sec 80 EEA eligibility requirements, it’s a good idea to get your home loan approved before the March 31 deadline and then wait for disbursement,” said Pramod Kathuria – Founder and CEO, Easiloan.

“Several sections of the Income Tax Act allow the buyer of a home to save tax on the interest and/or principal amount. In some respects, this is a move by the government to enable the purchase of a home and ease the burden on the borrower,” he added.

According to Kathuria, some of the tax saving provisions are –

  • Tax relief on principal amount under 80C (up to Rs 150,000 and tax deduction under Section 24(b) on interest paid (up to Rs 2 lakh for self employed and total amount under repayment for properties rented).
  • Deductions are also available under Sections 80 EE and 80EEA, which have been in effect for a few years.
  • 80EE allows an additional deduction of Rs 50,000 on top of section 24(b) for home loans sanctioned in the financial year 2016-17.

“80EEA and one of my favorites as it directly enables affordable housing – An additional deduction of Rs 150,000 on top of section 24(b). This applies to first time home buyers and a value of transaction less than Rs 45 lakh. Also, it cannot be clubbed with 80E. As you can see, this is a huge and clearly defined benefit to support the affordable first time home buyer. D ‘where a nice move that started in the 2019 budget and has continued every year since. Importantly, this also covers property under construction, unlike section 24(b) which covered those whose possession was received,” Kathuria said.

“Now the central government will not be renewing this sop beyond March 31, 2022. Therefore my advice to potential buyers (under affordable housing) is that if you are sure you are buying a house at any time in the next fiscal year (fiscal year 2022-23), then opt for a home loan sanction by the end of that fiscal year (before March 31, 2022) This sanction will allow you to take advantage of the benefits of the article 80EE A and for the full term of your home loan. Additionally, you can request a disbursement at any time until March 31, 2023,” he added.

“This is a good hack to make sure you don’t miss out on this benefit. Of course, the usual conditions under 80 EE A as mentioned before apply. Plus, in my opinion, a home loan sanction before locking home is always a good decision – it signals you are a serious buyer and gives you negotiating leverage,” Kathuria added, adding, “Also, if you have already locked in that dream home, you should go for the closing of the sanction of the mortgage loan before March 31, 2022.

“Just in case you are strayed from the entire home buying and home loan application, you don’t have to worry about missing out on this opportunity. There are 80EE and other sections as mentioned earlier Also, affordable housing is a priority area for our government, so always be optimistic about a new benefit in the future,” Kathuria suggested.

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Mortgage brokers celebrate changes to controversial lending laws https://flight93.org/mortgage-brokers-celebrate-changes-to-controversial-lending-laws/ Thu, 10 Mar 2022 23:59:00 +0000 https://flight93.org/mortgage-brokers-celebrate-changes-to-controversial-lending-laws/ Changes are coming for controversial new lending rules, which could mean banks aren’t required to carry out such scrutiny of borrowers’ current spending behavior. Trade and Consumer Affairs Minister David Clark said the government was updating the rules, which have been accused of “squeezing credit” on first-time home buyers in particular. The rules were introduced […]]]>

Changes are coming for controversial new lending rules, which could mean banks aren’t required to carry out such scrutiny of borrowers’ current spending behavior.

Trade and Consumer Affairs Minister David Clark said the government was updating the rules, which have been accused of “squeezing credit” on first-time home buyers in particular.

The rules were introduced as part of an effort to protect vulnerable borrowers from loans they could not afford.

But mortgage advisers and opposition politicians claimed they were having unintended consequences and urged banks and other lenders to become ‘ultra-conservative’, turning down loans they would have made before. People have reported being turned down for things like spending too much on a dog.

READ MORE:
* Don’t rush to change new responsible lending regulations, says social good lender Good Shepherd
* Trade Secretary David Clark rejects National’s plan to restore homebuyers’ borrowing power
* SBA boss is confident tough new lending rules will be eased so fewer home loan seekers are ‘weeded out’

John Bolton, chief executive of mortgage brokerage Squirrel, which led the campaign to get Clark to make changes to its new laws and regulations, said: “They listened. They heard. They made the appropriate changes without throwing the baby out with the bathwater.

“These changes address the immediate problem. It’s a good result,” Bolton said.

Roger Beaumont, chief executive of the New Zealand Bankers’ Association, said: ‘We believe they have identified some of the key pain points for consumers, but it is not clear that the changes announced today will do enough to move the dial to make a difference.

“More details are needed to see how the changes will actually work.”

Seven Sharp

How do I organize my expenses to impress the banks? New figures released by the Reserve Bank show lending across the board fell by $1 billion.

Clark said planned changes to the new lending laws clarified that when borrowers provide a detailed breakdown of future living expenses, lenders don’t need to inquire about current expenses from recent transactions.

Brokers had complained that banks had assumed current spending would continue once a mortgage was issued, leaving borrowers no leeway to adjust their spending when they had a loan to repay.

Lenders also didn’t need to count savings and investments as expenses, Clark said.

Some people had said having a higher KiwiSaver contribution rate as they saved a deposit had counted against them, as banks calculated how much they could afford assuming the contribution level would hold.

The obligation to obtain sufficiently detailed information would relate only to information provided directly by borrowers and not to information extracted from bank documents.

The government was also given alternative guidance and examples where it was “obvious” a loan was affordable, he said.

Minister under fire: David Clark has met chief executives of banks to discuss the impact of changes to the Lending Act introduced in December.

ROBERT KITCHIN/Stuff

Minister under fire: David Clark has met chief executives of banks to discuss the impact of changes to the Lending Act introduced in December.

Clark ordered the inquiry into whether adjustments were needed to new lending laws and regulations, which were introduced in early December as part of the Credit Agreements and Consumer Credit Act, in an effort to protect vulnerable borrowers from unscrupulous lenders.

“The changes we’re making are informed by feedback I’ve received from banks, other lenders and consumers and respect the spirit of the law,” Clark said.

This included direct feedback from bank chief executives in face-to-face meetings.

“These initial changes ensure Kiwis ready to borrow can still access credit as we continue to protect those most at risk from predatory and irresponsible lending,” Clark said.

“There is no doubt that banks, budget advisers and the government are all on the same page when it comes to supporting the intention of the law, we want to prevent vulnerable people from ending up with unaffordable debt. .”

Clark said he detected “little enthusiasm” for sweeping changes to the law, but a preference for practical changes to be made to ensure the legislation’s goals were met.

But a wider investigation into the implementation of the amendments continued.

Clark said investigations had shown no reason to believe the rule change was the main driver of the decline in lending that had been recorded and that seasonal movements could be a factor.

There were $4.667 billion in loans issued in January, down from $4.714 billion last January and $9.084 billion in November, before the rule change took effect.

“It’s also important to note that banks may be managing their lending more conservatively and this is likely due to global economic conditions.”

The changes coincided with rising inflation, interest rates on home loans and restrictions on low-deposit mortgages by the Reserve Bank of New Zealand Te Pūtea Matua.

Critics of the changes, including bank chief executives, said they made it harder for non-vulnerable borrowers to get mortgages and other forms of bank debt.

The data was released by Centrix, which appears to show the biggest impact has been on people with credit scores above 700 or more.

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Today’s mortgage rates are lower | March 7, 2022 https://flight93.org/todays-mortgage-rates-are-lower-march-7-2022/ Mon, 07 Mar 2022 13:27:26 +0000 https://flight93.org/todays-mortgage-rates-are-lower-march-7-2022/ Average mortgage rates are lower today for all loan categories. Homebuyers looking for a 30-year fixed rate mortgage will find average rates of 4.387%, down 0.144 percentage points from the end of last week. Refinancers can also take advantage of lower rates. Expect to see an average rate of 4.467% for a 30-year refi. The […]]]>

Average mortgage rates are lower today for all loan categories.

Homebuyers looking for a 30-year fixed rate mortgage will find average rates of 4.387%, down 0.144 percentage points from the end of last week. Refinancers can also take advantage of lower rates. Expect to see an average rate of 4.467% for a 30-year refi.

  • The last rate on a 30-year fixed rate mortgage is 4.387%. ⇓
  • The last rate on a 15-year fixed rate mortgage is 3.362%. ⇓
  • The last rate on a 5/1 ARM is 3.105%. ⇓
  • The latest rate on a 7/1 ARM is 3.378%. ⇓
  • The latest rate on a 10/1 ARM is 3.458%. ⇓

Money’s daily mortgage rates reflect what a borrower with a 20% down payment and a credit score of 700 — roughly the national average score — could pay if he or she applied for a home loan right now. Each day’s rates are based on the average rate that 8,000 lenders offered applicants the previous business day. Freddie Mac weekly rates will generally be lower, as they measure the rates offered to borrowers with higher credit scores.

Are you looking for a loan? Check out Money’s lists of top mortgage lenders and top refinance lenders.

Today’s 30-Year Fixed Rate Mortgage Rates

  • The 30-year rate is 4.387%.
  • It’s a day offold by 0.144 percentage points.
  • It’s a month to augment by 0.171 percentage points.

Predictable and relatively low interest rates make the 30-year fixed rate mortgage the most popular home loan in America. The long repayment period makes monthly payments on a 30-year loan more affordable than on a shorter-term loan. On the other hand, the overall cost will be higher because you will be paying a higher interest rate for longer.

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Average mortgage rates

Data based on US mortgages closed March 4, 2022

Type of loan March 4 Last week Change
15-year fixed conventional 3.36% 3.53% 0.17%
30-year fixed conventional 4.39% 4.49% 0.1%
ARM rate 7/1 3.38% 3.52% 0.14%
ARM rate 10/1 3.46% 3.64% 0.18%

Your actual rate may vary

15 years today fixed rate mortgage rates

  • The rate over 15 years is 3.362%.
  • It’s a day offold by 0.132 percentage points.
  • It’s a month infold by 0.136 percentage points.

The 15-year fixed rate loan will have a lower interest rate than a 30-year loan, which means you will have lower total costs over time. However, since you have to pay off the loan faster, the monthly payments will be higher and may not suit all budgets.

Use a mortgage calculator to determine which option is best for you.

The latest rates of adjustable rate mortgages

  • The last rate on a 5/1 ARM is 3.105%. ⇓
  • The latest rate on a 7/1 ARM is 3.378%. ⇓
  • The latest rate on a 10/1 ARM is 3.458%. ⇓

Variable rate mortgages will start with an initial fixed interest rate before the rate begins to adjust at set intervals. The rate on a 5/1 ARM, for example, is fixed for five years and then adjusts once a year. Although the initial rate tends to be quite low, it could increase significantly after the fixed period ends.

The Latest VA, FHA, and Jumbo Loan Rates

The average rates for FHA, VA, and jumbo loans are:

  • The rate on a 30-year FHA mortgage is 4.099%. ⇓
  • The rate for a 30-year VA mortgage is 4.517%. ⇓
  • The rate for a 30-year jumbo mortgage is 3.853%. ⇓

The latest mortgage refinance rates

The average refinance rates for 30-year loans, 15-year loans and ARMs are:

  • The refinance rate on a 30-year fixed rate refinance is 4.467%. ⇓
  • The refinance rate on a 15-year fixed rate refinance is 3.433%. ⇓
  • The rollover rate on a 5/1 ARM is 3.154%. ⇓
  • The refinance rate on a 7/1 ARM is 3.426%. ⇓
  • The refinance rate on a 10/1 ARM is 3.514%. ⇓
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Average Mortgage Refinance Rates

Data based on US mortgages closed March 4, 2022

Type of loan March 4 Last week Change
15-year fixed conventional 3.43% 3.62% 0.19%
30-year fixed conventional 4.47% 4.57% 0.1%
ARM rate 7/1 3.43% 3.59% 0.16%
ARM rate 10/1 3.51% 3.72% 0.21%

Your actual rate may vary

Where are mortgage rates going this year?

Mortgage rates have fallen through 2020. Millions of homeowners have responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people bought homes they might not have been able to afford if rates were higher. In January 2021, rates briefly fell to lowest levels on record, but rose slightly for the rest of the year.

Looking ahead, experts believe that interest rates will rise further in 2022, but also modestly. Factors that could affect rates include continued economic improvement and further labor market gains. The Federal Reserve has also started to scale back its purchases of mortgage-backed securities and said it plans to raise the federal funds rate three times in 2022 to combat rising inflation from March.

While mortgage rates are likely to rise, experts say the increase won’t happen overnight and it won’t be a dramatic jump. Rates are expected to remain near historic lows throughout the first half of the year, rising slightly later in the year. Even with rising rates, it will still be a good time to finance a new home or refinance a mortgage.

Factors that influence mortgage rates include:

  • The Federal Reserve. The Fed acted quickly when the pandemic hit the United States in March 2020. The Fed announced its intention to keep money flowing in the economy by lowering the Federal Fund short-term interest rate between 0% and 0.25%, which is also low as you go. The central bank also pledged to buy mortgage-backed securities and treasury bills, supporting the housing finance market, but began to scale back those purchases in November.
  • The 10-year Treasury bond. Mortgage rates keep pace with government 10-year Treasury bond yields. Yields first fell below 1% in March 2020 and have since risen. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
  • The wider economy. Unemployment rates and changes in gross domestic product are important indicators of the overall health of the economy. When employment and GDP growth are weak, it means the economy is weak, which can lower interest rates. Thanks to the pandemic, unemployment levels reached historic highs early last year and have yet to recover. GDP has also taken a hit, and although it has rebounded somewhat, there is still plenty of room for improvement.

Tips for getting the lowest possible mortgage rate

There is no universal mortgage rate that all borrowers receive. Qualifying for the lowest mortgage rates takes some work and will depend on both personal financial factors and market conditions.

Check your credit score and your credit report. Mistakes or other red flags can lower your credit score. Borrowers with the highest credit scores are the ones who will get the best rates, so it’s essential to check your credit report before you begin the home hunting process. Taking steps to correct mistakes will help increase your score. If you have high credit card balances, paying them off can also give you a quick boost.

Save money for a large down payment. This will lower your loan-to-value ratio, which is the share of the house price that the lender has to finance. A lower LTV usually translates to a lower mortgage rate. Lenders also like to see money that has been saved in an account for at least 60 days. It tells the lender that you have the money to finance the home purchase.

Shop around for the best rate. Don’t settle for the first interest rate a lender offers you. Check with at least three different lenders to see who offers the lowest interest rate. Also consider different types of lenders, such as credit unions and online lenders in addition to traditional banks.

Also, take the time to learn about the different types of loans. Although the 30-year fixed rate mortgage is the most common type of mortgage, consider a shorter-term loan such as a 15-year mortgage or an adjustable rate mortgage. These types of loans often come with a lower rate than a conventional 30-year mortgage. Compare the costs of all to see which best suits your needs and financial situation. Government loans — such as those backed by the Federal Housing Authority, Department of Veterans Affairs, and Department of Agriculture — may be more affordable options for those who qualify.

Finally, lock in your rate. Locking in your rate once you’ve found the right rate, the right loan product, and the right lender will help ensure that your mortgage rate doesn’t increase until the loan is closed.

Our mortgage rate methodology

Money’s Daily Mortgage Rates show the average rate offered by more than 8,000 lenders across the United States for which the most recent rates are available. Today we are posting rates for Friday, March 4, 2022. Our rates reflect what a typical borrower with a credit score of 700 might expect to pay for a home loan right now. These rates were offered to people depositing 20% ​​deposit and include discount points.

More money :

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Mortgagees continue to switch lenders en masse https://flight93.org/mortgagees-continue-to-switch-lenders-en-masse/ Sun, 06 Mar 2022 21:20:52 +0000 https://flight93.org/mortgagees-continue-to-switch-lenders-en-masse/ New figures released by the Australian Bureau of Statistics (ABS) show that homeowners with mortgages still seem to be making the most of relatively competitive interest rates by switching their loans in considerable numbers. Released as part of the ABS’s latest Lending Indicators release, the figures reveal that $14.3 billion in home loans were refinanced […]]]>

New figures released by the Australian Bureau of Statistics (ABS) show that homeowners with mortgages still seem to be making the most of relatively competitive interest rates by switching their loans in considerable numbers.

Released as part of the ABS’s latest Lending Indicators release, the figures reveal that $14.3 billion in home loans were refinanced with a new lender during the month of January – $9.2 billion from homeowners and $5.1 billion from investors.

While that total figure of $14 billion was actually down month-over-month, the ABS noted that the amount of refinancing undertaken was still 18.7% higher than in the same period in 2021.

In fact, the January total is the ninth-highest month on record for the ABS since it began tracking rollover data in 2004.

January 2022 external refinancing values ​​(seasonally adjusted). Source: abs

Is changing credit worth it?

Given that $14 billion in home loans were refinanced in January and a record $181 billion was transferred over all of 2021, some borrowers may be wondering, “Why didn’t I refinanced my own home loan?” and “Is it worth changing?”.

Deciding whether or not to refinance is unlikely to be a simple yes or no decision, as there are a number of factors that can determine whether it is worth it, or even possible.

For example, some mortgage holders will not be able to refinance with another lender if their loan-to-value ratio is above 80%. It also might not make financial sense for those who are currently locked into a fixed rate with substantial breakage fees, or for anyone who already enjoys a competitive rate.

If you’re able to refinance at a lower rate, it could be worth it considering the potential savings on offer – both in terms of money saved on monthly repayments and in total interest over the life of the loan.

Here is an example using the current average homeowner loan amount ($618,729) in Australia being repaid over a 20-year period with principal and interest repayments.

Monthly repayments Total interest
2.00% $3,130 $132,482
2.50% $3,279 $168,150
3.00% $3,431 $204,820
3.50% $3,588 $242,482
4.00% $3,749 $281,121
4.50% $3,914 $320,723

This is just a typical range of home loan rates available today, and it’s safe to say that over a 20-year period, any mortgage holder’s rate will generally fluctuate quite a bit. The takeaway, however, remains the same: a lower interest rate could help reduce the cost of the loan significantly over time.

RELATED: Many lenders offer $3,000 cash back to refinance your home loan

Want to know how much you could potentially save by switching loans? Make your life easier by taking our change and savings calculator for a spin, or familiarize yourself with a range of refinance offers by heading to Mozo’s dedicated refinance home loan comparison table.

* ATTENTION: This comparison rate only applies to the example or examples given. Different amounts and durations will result in different comparison rates. Costs such as withdrawal charges or prepayment charges, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate shown is for a secured loan with monthly principal and interest repayments of $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges, and therefore the total cost of the loan, may vary depending on your loan amount, loan term and your credit history. Actual repayments will depend on your personal circumstances and changes in interest rates.

^ See Mozo Experts Choice Home Loan Awards information

Mozo provides general product information. We do not take into account your personal goals, financial situation or needs and we do not recommend any particular product. You must make your own decision after reading the PDS or offering literature, or after seeking independent advice.

Although we pride ourselves on covering a wide range of products, we do not cover every product on the market. If you choose to request a product through our website, you will be dealing directly with the supplier of that product and not with Mozo.

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Three reasons why you should settle the mortgage last if you have several loans https://flight93.org/three-reasons-why-you-should-settle-the-mortgage-last-if-you-have-several-loans/ Wed, 02 Mar 2022 02:05:28 +0000 https://flight93.org/three-reasons-why-you-should-settle-the-mortgage-last-if-you-have-several-loans/ Most households have multiple EMIs running at once – from a home loan to a car loan to perhaps a durable consumer loan or even a credit card or personal loan. It is advisable to take out loans based on your cash flow and other expenses, there are times when the situation can become overwhelming […]]]>

Most households have multiple EMIs running at once – from a home loan to a car loan to perhaps a durable consumer loan or even a credit card or personal loan. It is advisable to take out loans based on your cash flow and other expenses, there are times when the situation can become overwhelming especially if there is a job loss or a drop in salary.

If you find yourself with several loans and you are not able to manage them all, it may be a good idea to settle some of the loans to reduce the burden, both financial and emotional.

Usually, the home loan is the most important because it is taken for an expensive asset, but settling the home loan first to reduce your burden may not be the right approach. Read on to find out why.

Lowest interest cost

Typically, home loans have the lowest cost or interest rate. It is best to settle the loans that have the highest cost. These are usually credit cards and personal loans. The interest rates for these loans can go up to 20%. By comparison, some financial institutions have mortgage rates as low as around 7% for certain categories of borrowers.

Consider reducing the burden of interest charges, as this is something you pay in addition to the principal amount. It’s best to close the personal or credit card loan first, as it’s likely to have the highest interest rate. Next in line should be car loans. Auto loan interest rates are usually fixed and higher than home loan rates. Currently, they are around 7 to 8%.

“A car loan is for a depreciating asset (i.e. a vehicle), so it has to be repaid after a personal loan because the interest rates are higher compared to a home loan,” says V. Swaminathan, CEO of Andromeda and Apnapaisa, a lending distribution company and its digital arm, respectively.

Fiscal advantages

Unlike a personal loan, credit card or car, the repayment of home loans offers a tax advantage on interest and principal repayment.

Given the tax benefits, home loans must be repaid after all other loans have been repaid. “When it comes to home loans, there are advantages such as tax benefits for paying principal and interest, which proves beneficial in the longer term because a home or house is an appreciating asset. and, therefore, you can try to keep them for a while,” says Swaminathan.

Auto

The main part of the EMI paid for the year is allowed as a deduction under Section 80C of the Income Tax Act up to Rs 1.5 lakh. Remember that this deduction is available if the property is not sold within five years of owning it. For the interest part of the EMI, a maximum deduction of Rs 2 lakh is allowed under Section 24B. In this case, the loan must be taken out for the purchase/construction of a house and the construction must be completed within five years of the end of the financial year in which the loan was taken out.

There could be another deduction of Rs 50,000 for the interest part, under Section 80EE, where the loan amount taken should be Rs 35 lakh or less and the value of the property should not exceed Rs 50 lakh . Additionally, there could be a deduction of Rs 1.5 lakh for the interest portion, under Section 80EEA, where the stamp value of the property is Rs 45 lakh or less.

Build an asset

Remember that a home loan helps you build wealth, which is not the case with other loans. A consumer loan or auto loan will also help you acquire and own property, but such property depreciates over time, unlike a house.

There’s no greater sense of accomplishment than prepaying or foreclosing a loan. “In doing so, it should be borne in mind that there are additional prepayment charges applicable in the event of a personal or car loan; home loans are mostly free of these fees. After paying the full amount of the closing, remember to obtain the “No Objection Certificate” (NOC) from the lender and the closing will be duly updated in the database of the credit authority . Remember to request and retrieve your original/pledged documents and removal of the lien from the pledged property or vehicle,” Swaminathan adds.

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What is that? Advantages and disadvantages https://flight93.org/what-is-that-advantages-and-disadvantages/ Fri, 25 Feb 2022 09:29:00 +0000 https://flight93.org/what-is-that-advantages-and-disadvantages/ Standard Chartered Bank has launched the “interest only home loan” in which borrowers will only pay the interest amount for an “interest only” period of up to 36 months. What is an Interest Only Home Loan? In an interest-only home loan, the borrower pays only the amount of interest for the initial period specified by […]]]>

Standard Chartered Bank has launched the “interest only home loan” in which borrowers will only pay the interest amount for an “interest only” period of up to 36 months.

What is an Interest Only Home Loan?

In an interest-only home loan, the borrower pays only the amount of interest for the initial period specified by the bank. After the “interest only period” ends, the borrower pays the full EMI, including the principal amount and interest until maturity.

Benefits of an Interest-Only Home Loan

The advantage of interest only home loans will be the low monthly payments during the interest only period. Borrowers will have additional savings that they can use to invest for higher returns.

There is flexibility offered in an interest only loan, borrowers have the option to start paying the EMI in full sooner.

Disadvantages of an Interest Only Home Loan

Since there is no repayment of principal in the interest-only period, the tax deduction under Section 80C of the Income Tax Act is not available during the period. . Additionally, there may be a payment shock when the initial interest-only period ends for borrowers.

It is true that repayment of installments is low during the interest-only period, but the overall loan burden increases with these products.

According to a Times Now report, for example, in a regular home loan of Rs 50 lakh at an interest rate of 8% for 30 years, the total amount payable in a regular loan will be Rs 1.32 crore while in an interest only loan the total amount will be Rs 1.34 crore.

The comparison is for educational purposes only and the actual result may differ from case to case. However, the underlying principle of an increased payment will remain the same.

Borrowers should opt for this only if their financial needs require it. According to Live Mint, since interest rates are currently low, it will be better to repay the loan and reduce the outstanding debt, provided the borrower can pay the EMI, including the principal amount.

Other banks offer similar services under different home loan products such as SBI’s Flexipay and a home loan overdraft called ‘SBI Maxgain’ where your primary obligation is to serve interest only.

(Edited by : Thomas Abraham)

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ABC raises fixed rates for second time in 18 days https://flight93.org/abc-raises-fixed-rates-for-second-time-in-18-days/ Mon, 21 Feb 2022 00:02:03 +0000 https://flight93.org/abc-raises-fixed-rates-for-second-time-in-18-days/ Australia’s largest bank, CBA, raised fixed rates for the second time in less than three weeks, with increases of up to 0.25%. The CBA last raised fixed rates on Feb. 3, up to 0.20% for homeowners and investors. As a result, its owner-occupant fixed rate for 2 years is now in line with pre-COVID levels […]]]>

Australia’s largest bank, CBA, raised fixed rates for the second time in less than three weeks, with increases of up to 0.25%.

The CBA last raised fixed rates on Feb. 3, up to 0.20% for homeowners and investors.

As a result, its owner-occupant fixed rate for 2 years is now in line with pre-COVID levels (February 2020). Its longer-term fixed rates are already significantly higher than pre-pandemic levels. Only the CBA’s 1-year fixed and variable rates are lower than they were two years ago.

Today’s CBA increases for homeowners paying principal and interest – contact us for CBA investor changes

Rate type Lowest old rate New lowest fare Change
1 year fixed

2.59%

2.79%

+0.20%

2 year fixed

2.84%

2.99%

+0.15%

fixed 3 years

3.24%

3.49%

+0.25%

4 years fixed

3.54%

3.69%

+0.15%

5 years fixed

3.79%

3.99%

+0.20%

Note: The above rates apply to owner-occupiers who pay the principal and interest of a flat rate.

CBA rates for homeowners – today vs before COVID, February 2020

Rate type Pre-COVID (February 2020) Today Change Difference in refunds ($500,000)
1 year fixed

2.99%

2.79%

-0.20%

-$54

2 year fixed

2.99%

2.99%

0.00%

$0

fixed 3 years

2.99%

3.49%

0.50%

$137

4 years fixed

3.19%

3.69%

0.50%

$139

5 years fixed

3.19%

3.99%

0.80%

$225

Lowest variable

3.22%

2.29%

-0.93%

-$246

Notes: Rates are for homeowners paying principal and interest. Monthly repayments are based on a $500,000 loan over 30 years.

RateCity.com.au research director Sally Tindall said today’s CBA rises show the bank is feeling the pressure of sustained increases in funding costs.

“It’s hard to believe that just five months ago the ABC was offering a fixed rate loan below 2%,” she said.

“Since then, the CBA has increased six times, raising most of its fixed homeownership rates above pre-pandemic levels.

“The big banks in particular have given up on competing with cheap lenders on fixed rates. If customers want to settle with four major banks today, chances are they will have to pay more.

“There are still relatively low rates from low cost lenders, however, in this environment they are unlikely to stick around for long. The RateCity.com.au database shows there is only one 2-year fixed rate starting with a ‘1’, and only 14 1-year rates below that,” she said. declared.

The Big Four Banks’ Lowest Home Loan Rates for Homeowners

Rate type ABC Westpac NAB ANZ
1 year fixed

2.79%

2.49%

2.64%

2.49%

2 years fixed

2.99%

2.74%

2.89%

2.89%

3 years fixed

3.49%

3.14%

3.34%

3.39%

4 years fixed

3.69%

3.54%

3.54%

3.79%

5 years fixed

3.99%

3.79%

3.69%

3.99%

Variable

2.29%

2.19%

2.29%

2.19%

Source: RateCity.com.au. Note: Certain LTV requirements apply.

Lowest homeownership mortgage rates on RateCity.com.au

Category Lender Rate
1 year fixed Unit Bank

1.84%

2 years fixed Geelong Bank

1.99%

3 years fixed Geelong Bank/Bank First

2.39%

4 years fixed Bank first

2.64%

5 years fixed Bank first

2.64%

Variable Reduce home loans

1.77%

Source: RateCity.com.au. Note: Rates apply to homeowner paying principal and interest, certain LVR and location restrictions apply.

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Current Mortgage Rates — February 17, 2022: Most Rates Higher https://flight93.org/current-mortgage-rates-february-17-2022-most-rates-higher/ Thu, 17 Feb 2022 14:13:09 +0000 https://flight93.org/current-mortgage-rates-february-17-2022-most-rates-higher/ Image source: Getty Images Is it the right time to take out a mortgage? Here’s the scoop. Mortgage rates are higher today for all loan products except the 20-year loan, which is down slightly from yesterday’s level. Here’s what the rates look like as of February 17, 2022: Type of mortgage Today’s interest rate 30-year […]]]>

Image source: Getty Images

Is it the right time to take out a mortgage? Here’s the scoop.

Mortgage rates are higher today for all loan products except the 20-year loan, which is down slightly from yesterday’s level. Here’s what the rates look like as of February 17, 2022:

Type of mortgage

Today’s interest rate

30-year fixed mortgage

4.135%

20-year fixed mortgage

3.794%

15-year fixed mortgage

3.347%

ARM 5/1

3.337%

The data source:class=”little-legend”> The National Mortgage Interest Rate Tracker from The Ascentclass=”little-legend”>.class=”little-legend”>

30-year mortgage rates

The average 30-year mortgage rate today is 4.135%, up 0.0410% from yesterday. At today’s rates, you’ll pay $486.00 principal and interest for every $100,000 you borrow. This does not include additional expenses such as property taxes and home insurance premiums.

20-year mortgage rates

The average 20-year mortgage rate today is 3.794%, down 0.020% from yesterday. At today’s rates, you’ll pay $595.00 principal and interest for every $100,000 you borrow. Although your monthly payment will increase by $109.00 with a 20-year loan of $100,000 compared to a 30-year loan of the same amount, you will save $31,970.00 in interest over your repayment period for every $100,000 borrowed.

15-year mortgage rates

The average 15-year mortgage rate today is 3.347%, up 0.020% from yesterday. At today’s rates, you’ll pay $707.00 principal and interest for every $100,000 you borrow. Compared to the 30-year loan, your monthly payment will be $221.00 higher per $100,000 of mortgage principal. However, your interest savings will be $47,448.00 over the length of your repayment period per $100,000 of mortgage debt.

RMA 5/1

The average ARM 5/1 rate is 3.337%, up 0.032% from yesterday. A 5/1 ARM should result in much lower monthly mortgage payments than a 30 and 20 year loan. But after five years, your ARM’s interest rate could spike, making your mortgage payments more expensive. Make sure you’re willing to take that risk before you pass up the opportunity to get a fixed loan.

Should I lock in my mortgage rate now?

A mortgage rate lock guarantees you a specific interest rate for a certain period of time – usually 30 days, but you may be able to guarantee your rate for up to 60 days. You’ll usually pay a fee to lock in your mortgage rate, but that way you’re protected if rates spike between now and when you take out your home loan.

If you’re planning to close on your home in the next 30 days, it pays to lock in your mortgage rate to today’s rates, especially since they’re quite attractive, historically speaking. But if your close is more than 30 days away, you might want to choose a variable rate lock instead for what will usually be higher fees, but could save you money in the long run. A variable rate lock allows you to get a lower rate on your loan if rates drop before your mortgage closes. Although today’s rates are somewhat low, we don’t know if they will increase or decrease over the next few months. As such, it pays for:

  • LOCK if closing 7 days
  • LOCK if closing 15 days
  • LOCK if closing 30 days
  • FLOAT if closing 45 days
  • FLOAT if closing 60 days

If you’re ready to buy a home, shop around with different mortgage lenders to compare the deals available to you. Be sure to ask about not just pricing, but also closing costs. The last thing you want is to get a low interest rate on a mortgage only to end up with high closing costs that are eating into your savings.

A Historic Opportunity to Save Potentially Thousands of Dollars on Your Mortgage

Chances are interest rates won’t stay at multi-decade lows much longer. That’s why it’s crucial to act today, whether you want to refinance and lower your mortgage payments or are ready to pull the trigger on buying a new home.

Ascent’s in-house mortgage expert recommends this company find a low rate – and in fact, he’s used them himself to refi (twice!). Click here to learn more and see your rate. While this does not influence our product opinions, we do receive compensation from partners whose offers appear here. We are by your side, always. See The Ascent’s full announcer disclosure here.

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