Things To Consider When Remortgaging
Over the past couple of months, the base interest rate in the UK has fallen by a massive 2% in total, and this is likely to have brought huge relief to many consumers who have variable-rate mortgages and have seen their rates rocket over the past couple of years. Not all banks will necessarily pass on the full rate cut to consumers, and because of this many may decide to remortgage and find a more competitive provider to service their mortgage.
If you feel that remortgaging could be a viable option for you to help you to save money there are some things that you should bear in mind to avoid being charged over the odds on your mortgage deals. Remember, the purpose of remortgaging is to save money on your mortgage, and this is why it is important not to rush into signing up for a deal with a new provider.
One of the most important areas to look at when you are considering remortgages is the rate of interest that each lender charges, as some may not pass on all or any of the recent base rate cuts. Lenders will want a deposit from you in order to give you a new mortgage, and these deposit requirements can vary from one lender to another, so this is another area that you need to compare.
Another thing to bear in mind is that many lenders will charge arrangements or set up fees for remortgages, and again these can vary from one lender to another. Remember, some lenders may try and entice you by offering a tempting APR but charging an astonishingly high arrangement fee, so don’t rush into a deal based solely on the interest rate.
You may find that your existing mortgage provider will charge you an early redemption fee for paying off your existing mortgage early, and this is also something that you will need to check before you commit to remortgaging. Only by checking on these settlement figures, and by comparing interest rates and arrangement fees from new providers, will you be able to determine whether remortgaging is actually going to benefit you.
One thing that will affect how much you have to pay each month by way of mortgage repayments is the amount of time over which you take the mortgage loan, otherwise known as the repayment period. With this in mind, you should also ensure that you compare the repayments periods on offer from different lenders before you make any commitment.
Your credit rating will go a long way towards determining how much you will be charged in terms of interest on your new mortgage, and those with bad credit will pay a far higher APR than the typical one advertised. In the current financial climate, there is also a strong chance that you may not be able to get a new mortgage loan at all, with lenders very wary about lending to those with damaged credit.
The good news is that you can easily compare lenders and remortgages online, so you won’t have to go into too much trouble to see whether there is a better deal out there.
Can I Cancel My Debt?
There are many names for the process of reducing a portion or all of your student loan debt due to some extenuating circumstances: cancellation, deferment, dischargement, forbearance, or forgiveness. There are subtle differences in the details of the processes – Deferment and Forbearance are temporary postponements of your repayment schedule; Cancellation, Dischargement, and Forgiveness remove your entire debt permanently.
If you are having problems repaying your loan, then contact the organization servicing the loan before late fees are assessed. You might qualify for deferment or forbearance.
Deferment – This is a temporary suspension of loan payments due to specific reasons, like re-enrollment, unemployment, bankruptcy, or economic hardship. Deferment can be made for up to three years. If you have a subsidized loan, you don’t need to pay interest during deferment. If you have an unsubsidized loan, you do need to pay interest during deferment; unpaid interest will be “capitalized” – added to the principal balance.
Forbearance – This temporary postponement or reduction of payments due to financial difficulty is a possibility for those who don’t qualify for deferment. Applications must be made to the loan servicer. Interest continues to accrue on the unpaid principal. The student must repay the full balance. Forbearance is permitted for a period of up to one year with a maximum of 3 years.
The College Cost Reduction and Access Act of 2007 have assisted government employees with student loans by providing forgiveness after 10 years of service. Active duty military can get loan deferment. Some special education, science, and mathematics teachers might have their loans forgiven.
Don’t Lose Hope, You Can Repay Student Loans
Do you have any idea how to repay student loans? In this day and age, it is essential that you have a good college education if you want to get a high-paying job and for most, that means you have student loans. These loans can often get out of control when you get behind on payments, but fortunately, there are a few things you can do to dig yourself out of that hole.
First, you can refinance. By refinancing you transfer your loan to another lender that will give you a lower APR (annual percentage rate), and therefore a lower monthly payment. Your APR is the total cost of the credit given to you by the lender. It is a percentage of your total loan and the amount of money it represents decreases as your loan amount decreases. First, you should consider the cost of refinancing. While there are some lenders that won’t charge you a fee upfront, some will. Avoid lenders that want to charge you a fee that will end up costing you more on a monthly basis, as that defeats the purpose.
The bank where you do your personal banking is a great place to look when you want to refinance your student loans because you both know each other financially. Your bank has records of all the business you’ve done with them and a good idea of what you are like. Another factor that works in your favor is the fact that banks enjoy having customers attached to several of their “products,” as it gives them stronger bonds with these people; people that are less likely to default on loans with a bank with which they have had a long-term relationship.
Second, consider consolidation. Consolidation simply means that all of your student loans are “bought out” by a lender (maybe even the lender that holds one or more of your current loans) and pulled together into one large loan. You can then pay on all your loans in one big monthly payment, rather than several smaller payments. Because you are making lower monthly payments, you save money in the short term.
You do have to consider the fact that consolidation will cost more money in the long term. While you definitely save money right away because your payment is smaller, the accumulated interest will in the end cost you more on the back end of the loan. In other words, you are only going to be paying a little bit at a time on the principal, i.e. the full amount of your loan, not counting interest or other fees. Most of your monthly payment will go towards the interest, making it take longer for you to pay it off.
Conclusion
If you are out of college yet still struggling with your student loans, don’t file for bankruptcy just yet; consider your options first. Both refinancing and consolidation are great options that will ease your burden, allow you to repay student loans, and get on with your life.