Home loan interest rates

How to Get Maximum Benefit from an Offset Home Loan Account

You've most likely heard the term Offset Home Loan Balance Transfer; you may even have one yourself, happy in the knowledge that you're doing something to pay your mortgage off sooner.

It's actually one of the most powerful tools you have, allowing you to save thousands - even hundreds of thousands - of dollars over the life of your mortgage.

But - are you REALLY taking advantage of that Offset Account?

What is an offset Home Loan Balance Transfer?

An offset account is a transaction account that is linked to your home loan. The credit balance of your transaction account is 'offset' daily against the outstanding balance of your loan, thus reducing the interest payable on that loan. Over time, this can really add up to large savings and reduce the time it takes to pay off your loan.

If you put as much money as you can into your transactional account that's linked to your mortgage, you can save interest each day that your money is there. Your mortgage is calculated on the full amount of your remaining debt MINUS any offset funds you have accumulated. In other words, your mortgage will no longer be calculated on your full debt.

Here's an example: say you have a home loan balance of $200,000 and have $10,000 in your offset account. So, you'll only pay interest on $190,000 of your home loan.

In short, an offset account offers you more flexibility. You'll be paying off your mortgage quicker, but still have access to your funds if you need them.

What to look for

There are both full (100%) and partial offset accounts. With 100% offset accounts, interest rates are earned and paid at the same time, while a partial offset account is where the interest earned is only a portion of the rate paid on the Home Loan Balance Transfer.

What you can do

There are a few steps you can take to make sure you get the most out of your account. Have your wages deposited in your transaction account, so the money you earn is immediately helping to reduce the interest you pay on your home loan.

Even though you will most likely spend some of that money over the month it's still of use. Another example - let's say that you get paid on the 15th of every month but your mortgage repayment comes on the 28th. Even though there's only 13 days between them, you'll be saving the difference in interest on the amount in your account for that period of time, which can eventually add up to thousands.
Any savings or lump sum payments you receive should go directly into this account. Again, you'll still have access to the money if you need it, but the longer it stays in the account, the more interest is paid off.

Is an offset account for you?

An offset account is useful if you, like many people, can't pay lump-sum repayments into your loan. You may be saving up for something specific - like renovations, holiday or school funding. You can use that money wisely before you cash it out for the reason you're saving it.

However, it's wise to make sure there's still some money left in the account, as fees can rise once your account sinks past a certain amount. An offset account will really only work if you have a decent amount of savings. If you only have a few thousand dollars on a regular basis, your savings won't be significant.

Article Source: http://EzineArticles.com/8965475

Home Loan

Home Loan Today - Gone Tomorrow

You have finally purchased a home of your own. For so many years it seemed to be like a dream always just a little out of reach. What happens next? You do not need to be shackled to your home loan for 25 or 30 years. Here are some useful tips to help you pay off your mortgage sooner and achieve "true home ownership".

Pay more to get ahead

It is a very simple concept to grasp - the more you pay off your mortgage every month the faster you will pay off your loan. Most people think in terms of making sure they pay just enough to cover their set repayments. By doing this you will keep your mortgage for the full loan term of 25 or 30 years. The key to paying your loan off faster is to make as many 'extra' repayments as you possibly can.

Increase the frequency of your repayments

One of the simplest and best strategies for reducing the term and cost of your loan (and thus your exposure should interest rates rise) is to make your repayment on a fortnightly rather than monthly basis. By splitting your monthly repayment into fortnightly you will effectively be repaying the same annual amount but your outstanding loan balance will reduce faster.

Amazingly enough, this change can cut thousands of dollars and years off your mortgage.

The reason for this is that there are 26 fortnights in a year, but only 12 months. Paying fortnightly means that you will be effectively making 13 monthly payments every year. And this can make a big difference.

Have you considered a professional package?

Most lenders offer a range of professional packages to clients who are prepared to pay a small monthly fee. These packages offer a reduction to the standard variable interest rate, can come with a cheaper home insurance, fee-free credit cards and a number of other options.

Consolidate and save

If on top of your Home Loan Balance Transfer you also have other outstanding loans such as a personal loan, credit cards, car loans etc. - by consolidating all your other outstanding loans into your mortgage you can generally significantly reduce your overall loan obligations and hence have more funds available to apply to your mortgage.

Many lenders will allow you to re-finance - your other debt under the umbrella of your home loan. This means that instead of paying 15 to 20 per cent on your credit card or personal loan, you can transfer these debts to your home loan and pay it off at a home loan rate.

Utilize your available equity

Home equity is the difference between the current value of your property and the amount you owe the lender. For example, if you have a property worth $500,000 on which you owe $200,000, you are said to have home equity of $300,000. In most cases you should be able to establish a line of credit or a home equity loan to access these funds.

Generally lenders will allow you to borrow up to about 80 per cent of the loan-to-value ratio (LVR) of your available equity. You can use this equity to help to pay off your home loan sooner.

[Source: http://ezinearticles.com/?Home-Loan-Today---Gone-Tomorrow&id=229283]

Home Loan Prepayments - Some Important Points

The high Home Loan Balance Transfer has forced the borrowers to think of prepayments. However, prepayment of home loans shouldn't be just done impulsively. There are a lot of factors to consider before making a decision to prepay a home loan or not. Here are some basic things to consider.

Factors to consider before prepayment

The current financial situation of the borrower: Is there enough money floating around to prepay the home loan?

How much money is needed immediately or in near future: Does the borrower have enough money to meet financial exigencies?

The Home Loan Balance Transfer: Are they likely to rise, remain at the same level or fall?

Are there investment options available which can give better returns (of course with minimal risks) than the current home loan rates?

Important points

Always calculate the total amount you have to pay to the bank. This included the home loan interest with the principal. This will give you a clear idea on the amount of money you owe to the bank.

If you are planning to invest the money instead of prepaying, calculate the total earnings by investments over the entire duration of loan amount. Always deduct the tax liabilities so as to reach exact figures. If subtracting your home loan repayment from the gains from investing, provide a surplus amount; it is always better to invest your money.

Prepayment penalties are also to be paid to the bank if you are not able to provide proofs that the money you are using to prepay is from windfall gains or your own. (People generally use Home loan balance transfers and get the money from other banks. In such cases banks will charge prepayment penalties).

If your home loan tenure has stretched substantially due to the increase in interest rates, consider making part- prepayments if your situation permits to keep the home loan tenure to the same levels.

Article Source: http://blogs.rediff.com/homeloantransfer/2016/08/20/home-loan-prepayments-some-important-points-2/

0% APR Balance Transfer

If you want to learn how to make money in new and interesting ways, one of the best things that you can do is to learn how to make money using a credit card offering a 0% APR balance transfer. What you want to do in order to make this work is to find a 0% APR balance transfer credit card and apply for it. The 0% APR balance transfer part is an introductory offer in 99.9% of all credit cards, so you simply have to find one that offers it, and get approved.

Once approved, you basically have free money - This is because you do not owe any interest for a set period of time, and that is what the 0% APR balance transfer part is all about. The goal that you are aiming for in this instance is to take advantage of the free balance transfer and 0% annual percentage rate or APR to use the money from the credit card to pay off other debts, like high interest credit cards, loans, car loans and home mortgages or home equity loans. By using your credit card money to pare this debt down, you are significantly cutting down your family debt without having to worry about ever increasing annual percentage rates.

Now, the trick here is to completely pay off the 0% APR Home Loan Balance Transfer credit card before the APR rises. There is always a preset introductory time period, and once this has expired, your credit card will suddenly have an APR attached to it, which can easily range from 2-3% to as much as 29% depending on who the issuing company is. By paying off your 0% APR balance transfer credit card before the APR expires, you are eliminating the chance of having to deal with enormous interest rates, which is why you pared down your older debt in the first place.

This is tricky business because it requires excellent money management so that you do not end up owing more debt in the long run. If you are serious about paring down old debts in favor of low interest credit cards and loans, then using 0% APR balance transfer credit cards is an excellent step in the right direction.

[Source: http://ezinearticles.com/?0%-APR-Balance-Transfer&id=1560253]

Beware of Balance Transfers!

How many of us have seen those commercials and advertisements advocating paying off your credit cards faster by switching the balance of your credit card onto a lower interest card? They call it a balance transfer and it makes perfect sense when they advertise these cards, transfer your debt that is being charged 19% interest on one credit card to another credit card at a lower interest rate. It sounds too good to be true doesn't it, remember that old saying about something that sounds too good to be true, it usually is!

In theory this tactic can work, but have you ever know banks or credit card companies to do something simply out of the goodness of their heart? Let's face it, the banks and credit card companies are in business to make a profit, they do everything feasible to keep you in debt for as long as they possibly can. You have to remember these companies have investors to satisfy and if they're making an offer like this there has to be some reason. So how are they making a profit?

The answer is they are counting on the fact that you can't control your credit card spending. In addition, they are hoping that you are like 99% of their other clients and when you get your card in the mail you take the card out and activate it without reading the terms and conditions. So let me explain to you how most of these offers work.

Let's say you sign up to a 2.9% introductory offer for balance transfers, what happens is that you will be charged that rate on the Home Loan Balance Transfer  that you transfer over. On any new charges that you make on your card you will be charged 19% interest, and then the other catch is when you make any payments they are applied to the balance that you transferred while the new purchases accumulate at a high interest rate. This is how they make money, they count on the fact that most people don't know how it works and don't notice that while their original balance at 2.9% is going down, they are more quickly accumulating a higher balance at 19%. By the time most people manage to pay off their balance transfer, they are back up to debt at the exact same amount they started with (if not more), at the same interest rate.

If you read the terms and conditions of your new card they do explain it in there in the finest print they legally can, buried in between 10 pages of other things. However, now that you know how it works it is possible to outsmart the banks and beat them at their own game. Balance transfers can be very useful, if you use them properly. If you are going to transfer a balance over to another card what you should do is hide that new card and never use it, this is the only way that accepting one of these offers will pay off. The other thing you should be cautious of is recharging your credit card, if you are doing a balance transfer the idea is to pay off debt and not get back into debt. It is advisable that you write up a good budget and try not to bring your credit cards with you when you go out, if you learn to live off cash, you can eliminate impulse shopping.

[Source: http://ezinearticles.com/?Beware-of-Balance-Transfers!&id=1901392]