higher interest – John Hesch http://johnhesch.com/ Tue, 15 Mar 2022 13:43:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://johnhesch.com/wp-content/uploads/2021/07/icon-150x150.png higher interest – John Hesch http://johnhesch.com/ 32 32 How rising interest rates will affect the stock market https://johnhesch.com/how-rising-interest-rates-will-affect-the-stock-market/ Tue, 15 Mar 2022 13:43:00 +0000 https://johnhesch.com/how-rising-interest-rates-will-affect-the-stock-market/ The Bank of England’s monetary policy committee is due to meet on Thursday March 17 to decide whether or not to raise interest rates. At its last meeting on February 3, the central bank doubled interest rates to 0.5% from 0.25%. According to data from the Office for National Statistics (ONS), a measure of inflation, […]]]>

The Bank of England’s monetary policy committee is due to meet on Thursday March 17 to decide whether or not to raise interest rates. At its last meeting on February 3, the central bank doubled interest rates to 0.5% from 0.25%.

According to data from the Office for National Statistics (ONS), a measure of inflation, the consumer price index (CPI) fell from 5.4% in December to 5.5% in January, marking an acceleration for four consecutive months.

© 2022 Kalkine Media®

Inflation in the UK has reached its highest rate since March 1992, adding pressure to the current cost of living with soaring gas and electricity prices, high weekly shopping expenses and a additional pressure on stagnant wages. The situation was difficult before the start of the Russian-Ukrainian war. Now, with the invasion, inflation is set to climb higher than expected and stay at unexpected levels for longer than experts and industries thought.

READ ALSO : Top 5 Dividend-Paying Consumer Stocks to Watch

Inflation is not always bad for an economy, but extremely high inflation can devalue the currency, increase the cost of living and economic uncertainty, and can even lead to hyperinflation if left untreated. too long.

Usually, to cope with rising inflation, central banks raise interest rates, which means that high interest rates slow down rising inflation because they reduce purchasing power and lower interest rates increase the rate of inflation because they encourage purchasing power. However, central banks cannot massively raise interest rates all at once, as this could lead to economic collapse. Instead, in times of high inflation, central banks raise interest rates in small increments.

Related Reading: How Rising Interest Rates Will Affect Britons

How can rising interest rates impact the stock market?

When the Bank of England decides to raise the interest rate, it increases the cost of borrowing on loans, mortgages and credit cards for individuals and businesses, which slows down cash flow in the ‘economy. This means that if a company wants to take out a loan or debt, it has to pay a higher interest rate, which makes that company’s stock riskier to invest in.

© 2022 Kalkine Media®

Raising the interest rate also reduces the demand for loans in an economy and can reduce available consumer spending. Customers have to pay more on their outstanding bills, which will leave them with less disposable income.

This can again hamper growth and spending in the economy, which is negative for businesses as they may have to raise prices. So this will hit customers again as many won’t or can’t pay. This could slow the sale, reduce corporate profits and ultimately affect their stock price.

However, the impact of rising interest rates can be different across sectors, such as financial institutes that often do well when the central bank raises interest rates because it increases their profit potential.

Conclusion
A little inflation in an economy is considered healthy, but if inflation is rising sharply, it should be a matter of concern and should be addressed.

Investing in stock markets can be risky, especially when the situation is volatile due to a geopolitical crisis. Although many stocks can offer excellent returns to their investors, things could turn out differently. It is therefore very important to study and then invest.

Related reading: How does inflation affect interest rates?

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HELOC potential “20 times greater than that of a second mortgage”, says CEO https://johnhesch.com/heloc-potential-20-times-greater-than-that-of-a-second-mortgage-says-ceo/ Mon, 14 Mar 2022 16:19:41 +0000 https://johnhesch.com/heloc-potential-20-times-greater-than-that-of-a-second-mortgage-says-ceo/ Hubert Fenwick, co-founder and CEO of fintech Selina Advance, said there is a “huge opportunity” for the UK mortgage industry to commercialize home equity lines of credit (HELOCs), which could potentially generate £25bn. pounds per year. The company is said to be the first in the UK to market a HELOC, a type of second […]]]>

Hubert Fenwick, co-founder and CEO of fintech Selina Advance, said there is a “huge opportunity” for the UK mortgage industry to commercialize home equity lines of credit (HELOCs), which could potentially generate £25bn. pounds per year.

The company is said to be the first in the UK to market a HELOC, a type of second mortgage which allows homeowners to borrow against the value of their home and access cash.

However, unlike a second mortgage, a HELOC allows the borrower to withdraw cash as needed instead of a lump sum. HELOCs are a more common mortgage product in the United States, where they are normally used to pay for repairs, renovations and even training courses.

home ownership price

Revealed – percentage of Londoners unhappy as property prices continue to rise

Speaking to Mortgage Introducer last week, Fenwick said there was a large untapped market for HELOCs in the UK.

He said: “If you look at the size of the US market – $130bn a year on an individual basis – that would imply the market is around £25bn (in the UK). That’s about 20 times the size of a second load market.

A 2016 report by data analytics firm Corelogic noted that the HELOC market peaked in the United States in 2005, when creations totaled nearly $364 billion, dropping to around $150 billion in 2015, although a separate 2017 report estimated that demand for the product would double. by this year.

Since 2020, when Selina Advance gained regulatory approval for consumer lending, the company has issued over $100 million in loans with HELOC products in the UK.

The company recently raised $150 million in Series B funding, while existing investors are also pitching in to raise $35 million in equity. In addition, $115 million of debt has been guaranteed by Goldman Sachs to fund further expansion to first public securitization.

Fenwick, who co-founded the company with COO Leonard Benning in 2019, went on to explain the benefits of the product. He said: “The main attraction is that it doesn’t affect the (borrower’s) mortgage. It rests on top; kinda like a second charge. But it’s also flexible, so you don’t have to pull at any time. It’s like a credit card in that you only pay interest for the funds you need.

He also pointed out that there are no prepayment charges with a HELOC and the borrower is not tied to higher interest debt. “You are not bound in any way. You don’t have to draw anything you’re approved for, so it’s really empowering for owners.

According to a report by US personal finance company, Nerdwallet, the main disadvantage of a HELOC is that it increases the risk of foreclosure if the borrower is unable to repay the loan. It is also not suitable if the borrower’s income is unstable or if he cannot pay the initial fees.

Fenwick, however, stressed that the company wanted to be “very incentive aligned with our borrowers.”

He said: “The maximum we’ll go into is 85% LTV, so we’re still keeping a decent share of the equity in their homes – and they obviously have an incentive to preserve that value.”

He pointed out that while some second-charge lenders were lending up to 120%, Selina Advance would not follow. “We want it to be a tool for financial empowerment and for people to make smart financial decisions and save money. We don’t really see it as a tool to just add more leverage or take on more debt.

When asked why the product didn’t catch on earlier in the UK, he said: “The UK banking system is very oligopolistic. There has been very little innovation in many areas. They have huge mortgage companies, huge credit card companies, huge

current account businesses, but they haven’t really focused on creating new products that really benefit owners.

Although Fenwick said he expected demand for HELOC to “explode in the UK over the next five years”, he added that it would take time to educate customers and loan advisers. mortgages.

“We’re building a business for the very long term – you don’t educate a market overnight,” he said. “The US was the pioneer of credit cards, but it took the UK about 10 years to catch up and now credit card usage and penetration is almost identical in the UK and United States.”

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Prepare early for interest rate changes, Liberty says https://johnhesch.com/prepare-early-for-interest-rate-changes-liberty-says/ Sun, 13 Mar 2022 22:00:00 +0000 https://johnhesch.com/prepare-early-for-interest-rate-changes-liberty-says/ Home loans Home loans MELBOURNE, Australia, March 14, 2022 (GLOBE NEWSWIRE) — With much speculation about interest rate hikes to come, freethinking lender Liberty says there are steps homeowners can take to prepare for a higher interest rate market. Many homeowners are concerned about forecasts that June could bring interest rate hikes. But they can […]]]>

Home loans

Home loans

MELBOURNE, Australia, March 14, 2022 (GLOBE NEWSWIRE) — With much speculation about interest rate hikes to come, freethinking lender Liberty says there are steps homeowners can take to prepare for a higher interest rate market.

Many homeowners are concerned about forecasts that June could bring interest rate hikes. But they can minimize the impact on their home loan repayment with a few simple steps.

Talking to a mortgage broker or Liberty Adviser is an easy first step. A broker can help homeowners assess their finances and see where changes can be made to accommodate reimbursement increases.

Heidi Armstrong, head of consumer advocacy at Liberty, says a broker can also help review an existing home loan to see where efficiencies can be made to help reduce interest payable.

“Homeowners may not realize the features of the home loan available to them that could help reduce the amount of interest they pay.

“Opting for an offset account or having your salary paid into your loan to use as an all-in-one account are just a few options mortgage holders might want to explore.”

A broker can also help homeowners consider consolidating high-interest credit card or personal loan debt into their home loan, making their overall loan obligations much easier to manage.

For those who are only making the minimum loan repayments, additional repayments could help minimize their loan and reduce the overall interest payable. Using an online repayment calculator can allow homeowners to see the impact even a small increase can have on the term of their home loan.

And for those looking to buy, flexible lenders like Liberty can accommodate those with unique circumstances. The leading non-bank encourages borrowers with irregular, seasonal or self-employed income to consider their more free-spirited mortgage solutions.

Approved candidates only. Lending criteria apply. Taxes and fees are payable. Liberty Financial Pty Ltd ACN 077 248 983 and Secure Funding Pty Ltd ABN 25 081 982 872 Australian Credit License 338133, as well as trading as Liberty Financial.

Contact
Heidi Armstrong
Group Leader – Consumer Communications
Phone. : +61 3 8635 8888
Email: mediaenquiries@liberty.com.au

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This content was posted through the press release distribution service on Newswire.com.

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Why the government has offered the lowest interest rate on the Employees Provident Fund in over 40 years https://johnhesch.com/why-the-government-has-offered-the-lowest-interest-rate-on-the-employees-provident-fund-in-over-40-years/ Sat, 12 Mar 2022 10:08:28 +0000 https://johnhesch.com/why-the-government-has-offered-the-lowest-interest-rate-on-the-employees-provident-fund-in-over-40-years/ The retirement fund organization Employees Provident Fund Organization (EPFO) on Saturday lowered the interest rate on the employees’ provident fund to 8.1% for 2021-2022, the lowest rate offered by the EPFO ​​since more than four decades, the Press Trust of India news agency reported citing sources. This is the lowest level since 1977-78, when the […]]]>

The retirement fund organization Employees Provident Fund Organization (EPFO) on Saturday lowered the interest rate on the employees’ provident fund to 8.1% for 2021-2022, the lowest rate offered by the EPFO ​​since more than four decades, the Press Trust of India news agency reported citing sources. This is the lowest level since 1977-78, when the EPF interest rate was 8%.

In March 2020, the EPFO ​​had lowered the interest rate on deposits to the provident fund to a seven-year low of 8.5% for 2019-20, from 8.65% forecast for 2018-19.

The forecast EPF interest rate for 2019-20 was the lowest since 2012-13, when it was reduced to 8.5%.

Why low interest rate?

The lowest interest rate offered by the government on the provident fund is due to the low interest regime currently prevailing in the economy. The Reserve Bank of India has kept interest rates at record highs for the past 10 policy meetings to support economic growth that has been ravaged by the Covid-19 pandemic.

Currently, the RBI’s repo rate or lending rate is stable at an all-time high of 4% and the reverse repo, or the rate at which it absorbs excess cash from lenders, unchanged at 3.35%.

With RBI interest rates at record lows, banks are also charging lower interest rates on home loans, car loans, personal loans and other types of loans. The State Bank of India, the largest lender in the country, charges 6.7% interest and even private lenders offer home loans from the same interest rate.

Auto loans are offered by the State Bank of India in the range of 7.2 to 7.7 percent, according to data on its website.

Hence interest rates on deposits are also at lower levels, State Bank of India is offering fixed deposit term interest rate from 211 days to less than one year at 4.4% and on longer-term fixed deposits with tenors of 2 years and 3 years. are offered at 5.1 percent.

However, with rising inflation due to soaring crude prices internationally following Russia’s invasion of Ukraine and soaring prices for various industrial metals due to supply chain disruptions of supply following sanctions on Russia, it remains to be seen when the low interest rate regime cycle will turn with various central banks also hinting at higher interest rates.

Earlier this month, US Federal Reserve Chairman Jerome Powell said he supported a traditional quarter-point increase in the Federal Reserve’s benchmark short-term interest rate during the Fed meeting later this month, rather than a bigger hike proposed by some of its policymakers. , reported the Associated Press news agency.

But Powell opened the door for a bigger hike in case inflation, which has hit a four-decade high, doesn’t come down materially this year, as the Fed expects.

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How to Choose the Best Loan Company for Bad Credit https://johnhesch.com/how-to-choose-the-best-loan-company-for-bad-credit/ Tue, 08 Mar 2022 20:59:55 +0000 https://johnhesch.com/how-to-choose-the-best-loan-company-for-bad-credit/ A bad credit loan could be a viable option if you can’t get approved for a loan from a bank, credit union, or borrow money from friends and family. It is relatively easy to apply and most lenders issue quick loan decisions. Interest rates can reach up to 36% on unsecured and secured personal loans […]]]>

A bad credit loan could be a viable option if you can’t get approved for a loan from a bank, credit union, or borrow money from friends and family.

It is relatively easy to apply and most lenders issue quick loan decisions. Interest rates can reach up to 36% on unsecured and secured personal loans for bad credit or triple digits for payday loans and cash advances.

However, not all loan options are the same. Before applying, consider how to choose the best bad credit lender.

What is a bad credit loan

A bad credit loan is a personal loan for consumers with credit difficulties. You may also qualify for a bad credit loan if you have little or no credit history.

Loans for bad credit generally have no restrictions on how the funds can be used. Some borrowers cover financial emergencies, medical bills, or make expensive home repairs. Others use the money to consolidate their debts or as they see fit.

These loan products usually come with high interest rates because they are risky for the lender. But the interest rate on most bad credit loans is fixed, so the monthly payment amount won’t change. Loan proceeds are allocated in a lump sum and payable in equal monthly installments over a specified period.

Payday loans and cash advances are alternatives to bad credit personal loans. However, interest rates and fees tend to make these loans very risky options.

Types of loans for bad credit

There are four main types of bad credit loans.

Secure loan

You will need collateral to get approved for a secured loan. However, the rate will generally be lower than what you would get with an unsecured loan. Your lender can seize your property and sell it to recover their losses if you fail to repay the loan.

These loan products are also easier to obtain if you have bad credit. However, they should only be used if you can comfortably afford the loan repayments.

Unsecured loan

This type of loan is preferred if you need a bad credit loan. You won’t need collateral to qualify and you could be eligible for a hefty amount. The downside is that your interest rate will be higher with a lower credit score.

Consider targeting online lenders. They tend to offer more flexible personal loan options for borrowers with bad credit than traditional banks and credit unions.

payday loan

A payday loan can be used as a last resort if you cannot qualify for a personal loan or borrow from family or friends. It is a short term loan of $500 or less. It comes with an excessive interest rate, usually in the triple digits, and is payable on the day of your next payday.

These loans are extremely risky and can trap you in a dangerous cycle of debt if you are unable to pay and are forced to extend the term of the loan. You could rack up several hundred dollars in interest and fees each time you carry over the balance.

Cash advance

Like payday loans, cash advances are another expensive way to borrow money. They are available from some credit card issuers and involve withdrawing funds from your credit card’s available balance.

The amount you borrow will be added to your existing account balance, but you can expect to pay a higher interest rate than that charged for purchases made with the card.

How to Choose a Loan Company for Bad Credit

Beyond funding timelines, there are other factors to consider when evaluating bad credit lenders.

Borrowing costs

The cost of borrowing varies by lender and loan product. Get options from multiple lenders and compare them to see which offers the most competitive interest rate and doesn’t charge a fortune in fees.

Reputation of the lender

Bad credit loans are readily available from several financial institutions, both physical and online. Not all lenders are the same and some should be avoided. Some lenders may even be scammers.

Avoid lenders that aren’t registered to do business in your state, offer guaranteed approvals without a credit check, or require an upfront payment to approve you for a loan. It is equally important that they have a secure website and a physical address.

Loan conditions

An extended repayment term means that your monthly payment will be lower, but you will pay more interest over the life of the loan. So, a shorter loan term might be more ideal if you want to pay off what you owe faster and save a lot of interest.

Client experience

The lender should offer customer support by phone, online, or both at times that suit your busy schedule. It’s also essential that the application experience is seamless and that the lender gives you the ability to manage your loan online through a mobile app once it’s approved and you start making payments.

At the end of the line

Several loan options for bad credit could be suitable. But before applying for a loan, research loan types and shop around for quotes. When narrowing down your options, you also want to evaluate lenders based on their reputation, loan costs, terms, and customer service to find the best one for you.

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Top 5 Tips for Rebounding from Bad Credit | News from the region https://johnhesch.com/top-5-tips-for-rebounding-from-bad-credit-news-from-the-region/ Sun, 06 Mar 2022 02:29:00 +0000 https://johnhesch.com/top-5-tips-for-rebounding-from-bad-credit-news-from-the-region/ Budget setbacks can happen at any time, whether it’s unexpected bills, expensive repairs or the loss of a job. These financial situations can lead to bad credit or financial instability. Having a bad credit score can affect your loan, mortgage, or job application. A bad credit score is seen as a sign of lack of […]]]>

Budget setbacks can happen at any time, whether it’s unexpected bills, expensive repairs or the loss of a job. These financial situations can lead to bad credit or financial instability.

Having a bad credit score can affect your loan, mortgage, or job application. A bad credit score is seen as a sign of lack of discipline in credit behavior, which lowers your chances of availing loans.

You might end up paying higher interest for sanctioned loans. The good news is that there are companies that offer personal loans for bad credit. However, be sure to conduct thorough research to identify a reputable lender in your locality.

Nevertheless, it is important to identify ways to bounce back from a bad credit score. It would be better to understand that rebuilding your credit is more difficult than starting from scratch.

You are trying to show credit card issuers, lenders and employers that you will be able to have better financial management in the future despite your current situation. But before you begin the process of rebuilding your credit score, it’s essential to make sure you understand your current score.

Below are some tips you might consider using to rebuild your credit score. They understand:

1. Take stock of your debt

Taking stock of your debt will make it easier for you to know how much you owe and how much interest it’s costing you. You can easily decide where you should start focusing your efforts and the best strategy for paying off your debt. This includes:

Debt Snowball – This debt repayment strategy allows you to gradually repay the smallest to the largest debt. This way, you will make progress sooner.

Debt Consolidation – This strategy allows you to consolidate all your debts into a single loan with a single interest rate. This will make it easier to pay and track your various debts.

Avalanche of debt – In this method, you will prioritize paying off the debt with the highest interest rate. This is an ideal route to save time and interest on your debt repayment journey.

Do extensive research to identify the best strategy for paying off your debts. Paying off your debt will influence your credit score, making it easier for you to get a low-interest loan or mortgage.

2. Refrain from submitting multiple credit applications

Each time you apply for a loan or credit card, the issuer will assess your creditworthiness using your credit report. Such lender-initiated credit reports can lower your credit score by certain points.

So, if you apply to multiple lenders, especially in a short period of time, it can negatively impact your credit score.

To avoid this, visit various online marketplaces to compare loans based on your credit score instead of applying for a loan directly from multiple lenders. Although these marketplaces may retrieve your report from a credit bureau, this will not affect your credit score as these are unauthorized requests.

3. Set up automatic payments

Several factors can affect your credit score. They include late payments, credit usage, etc. Thus, on-time payments will play a huge role in improve your credit report. Automating your payment will ensure you don’t miss any payments.

Features like autopay are generally available for most bills and let you set a date each month to automatically use funds from your bank or credit account to pay bills. This will help you avoid late payments, which will help rebuild your credit score.

4. Develop a financial cushion

Developing a financial cushion will ensure you have a reliable way to pay for unexpected expenses if your savings fund isn’t enough. So your rainy day fund should include backup options beyond a savings account.

Including a contingency funding option in your emergency plan will make it easier to access sufficient funds to meet unexpected bills.

If your fund is low, it’s important to improve your savings rate, to ensure you have a steady flow of funds to cover emergencies.

This is another trick you can use to tackle your debt. Be sure to conduct a thorough audit to understand where your money is currently going. This will make it easier for you to assess whether your current budget meets your financial goals.

For example, if your goal is to pay off debt, but you find yourself spending money on other things like shopping, it’s time to re-evaluate your budget. This will help you avoid accumulating debt, which could affect your credit score.

There are several ways you can use to improve your budget. For example, 50-30-20 budgeting is a strategy that helps you divide your income into essentials, wants, and savings. You can also use several budgeting apps to reassess your spending and improve your credit score.

As stated above, bad credit can affect your loan or mortgage application. You could end up paying higher interest, which would affect your savings margin. For this reason, it is important to identify ways to increase your credit score.

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What is the maximum interest rate an approved lender can legally charge?, Money News https://johnhesch.com/what-is-the-maximum-interest-rate-an-approved-lender-can-legally-charge-money-news/ Sun, 27 Feb 2022 09:00:00 +0000 https://johnhesch.com/what-is-the-maximum-interest-rate-an-approved-lender-can-legally-charge-money-news/ When looking for the best personal loan, licensed lenders are a good alternative to banks. Fast, easy and convenient, approved lenders speed up the process, turning what could take weeks into days. Depending on the type of personal loan, approved lenders are more lenient with their money, allowing them to lend to more people. This […]]]>

When looking for the best personal loan, licensed lenders are a good alternative to banks. Fast, easy and convenient, approved lenders speed up the process, turning what could take weeks into days.

Depending on the type of personal loan, approved lenders are more lenient with their money, allowing them to lend to more people. This makes approved lenders faster and more ideal for smaller sums.

However, some might think that personal loans from approved lenders are not as legitimate. This mindset, while valid at times, unfortunately limits the personal loan options available.

This is not only detrimental if you need a personal loan quickly, but it is necessary if you have a lower credit score and are unable to get a personal loan from the bank.

To better understand approved lenders on a balanced scale, here are four common myths you should avoid when considering borrowing from approved lenders.

4 myths you should avoid when considering a personal loan from an approved lender

PHOTO: Value Champion

Myth 1: All loan sharks are loan sharks

Loan sharks (or “Oh long”) are unlicensed lenders who use illegal tactics to promote, encourage and lend personal loans. Often they go through unsolicited telemarketing text messages and messages regarding their personal loans.

In case of default, they charge exorbitant interest rates and resort to unregulated harassing methods to drive out debts. These tactics often harm neighborhood communities and can lead to unwarranted violence in order to get their money back.

These are the loan sharks we should all avoid. Unfortunately, many approved lenders get it wrong.

Licensed lenders, on the other hand, can be recognized by their license number. These figures are administered by the Department of Justice and can be found on their comprehensive list of approved lenders on their website.

To compare approved lenders and their personal loan rates based on your needs, Lendela is a good option.

Lendela allows users to compare different personalized personal loan offers based on their needs and credit history, so one can be sure that they are getting a legal personal loan from approved lenders that suits their budget. and their credibility.

Myth 2: You can’t take out a personal loan with a low credit score

The truth is you can. Approved lenders are open to providing personal loans to people with low credit ratings, provided they have clear evidence of a steady stream of income from employment to repay the loan. They will not charge any excess interest rate and may sometimes provide debt consolidation services.

In fact, taking out a personal loan from an approved lender can help improve your credit score. Since the credit score is usually difficult to improve, this is a good opportunity to move it to a better place.

Myth 3: Secured personal loans from approved lenders are better than unsecured loans

Backed by collateral, secured personal loans are generally preferred for low interest rates. It allows borrowers to borrow a larger amount from an approved lender and allows them to spread their payments over a longer period. Examples include mortgages and auto loans.

Unsecured personal loans (for example, student loans) have no collateral. Instead, they are granted by an approved lender based on the reliability of the borrower.

However, that means it comes without the benefits of a secured personal loan – higher interest rates while borrowing a lower amount. They also need to repay their loan as soon as possible.

Although secured loans may seem favorable due to their advantages, approved lenders would need more time to process, evaluate and approve the collateral. This makes the borrowing process much slower, which may not be favorable for borrowers who are in dire need of money.

To choose the best option, one must consider the reason for the loan. If you are a short term borrower, select an unsecured loan. However, if you are able to wait through the entire collateral approval process, secured personal loans might be your best bet.

Myth 4: Approved lenders have higher interest rates than banks

Approved lenders are actually tightly regulated and they are not able to charge an interest rate higher than that stipulated by the Department of Justice.

In fact, the regulations facing banks are slightly more lenient. Although their interest rates are lower, there is no law preventing them from charging higher interest rates. As a result, some banks charge much more than all approved lenders.

So what is the maximum interest rate an approved lender can legally charge?

Lend money
PHOTO: Value Champion

According to the Department of Justice, approved lenders can legally charge late payment interest of up to 4% per month. This limit is effective whether it is a secured or unsecured personal loan and the income the borrower earns.

Interest can only be charged on the remaining money that has not been paid. This means that if Person A took out a $10,000 personal loan and repaid $8,000 on time, only the remaining $2,000 should be charged for late interest.

Remaining amount that has not been paid:

$10,000 – $8,000 = S$2,000

Therefore, $2,000 is payable in interest

Interest may also be charged only for amounts that have been paid late. For example, Person B took out a personal loan of $10,000 repaid in installments of $2,000. He did not pay his first installment. This means that only the $2,000 of this late payment is chargeable to late payment interest.

Other fees approved lenders may charge according to the Department of Justice include:

  • A fee not exceeding $60 for each month of late repayment
  • A commission not exceeding 10% of the principal of the loan when a loan is granted
  • Court-ordered legal costs for a successful claim by the lender to recover the loan.

This article was first published in ValueChampion.

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35% of Canadians fear rising interest rates will push them into bankruptcy https://johnhesch.com/35-of-canadians-fear-rising-interest-rates-will-push-them-into-bankruptcy/ Tue, 22 Feb 2022 19:02:06 +0000 https://johnhesch.com/35-of-canadians-fear-rising-interest-rates-will-push-them-into-bankruptcy/ More than half of Canadians are biting their nails in anticipation of the next Bank of Canada interest rate hike, which is widely believed to take place next month. An Ipsos poll conducted for the bankruptcy consultancy MNP LTD showed that 55% of Canadians aren’t confident they can withstand rising interest rates, while 54% are […]]]>

More than half of Canadians are biting their nails in anticipation of the next Bank of Canada interest rate hike, which is widely believed to take place next month.

An Ipsos poll conducted for the bankruptcy consultancy MNP LTD showed that 55% of Canadians aren’t confident they can withstand rising interest rates, while 54% are more concerned that they might have trouble repaying their debts than they were before . Thirty-five percent of Canadians fear that rising interest rates will push them into bankruptcy.

“As we approach what will likely be the first of several interest rate increases over the coming year, more and more Canadians are worried about how they will fare,” he said. said Grant Bazian, president of MNP LTD., in a press release. “The most vulnerable are those who have taken out credit to get by and are unable to repay the debt. The extra costs of servicing debt come at a time when many Canadians are already finding it less affordable to feed their families or pay for things like housing.

Read: Borrowers could be hit by a tougher mortgage stress test this year

Sixty-one percent of Canadians due to renew their mortgage in the next 12 months expressed apprehension about impending rate hikes, and 75% of respondents who have borrowed money they haven’t able to repay quickly or who only pay minimum balances on their credit cards and personal loans, think they will be in trouble. Perhaps unsurprisingly, 80% of respondents who rated their personal financial situation as “poor” are the most likely to believe they will be jeopardized by interest rate hikes.

Most vulnerable variable debt holders

Talk of a series of rate hikes this year will make life difficult for variable-rate mortgage holders, Bazian says, and it could prompt households to adjust their budgets for what he says will be hundreds or thousands of dollars more in mortgage costs. He added that even Canadians who have purchased HELOCs will be similarly affected.

Younger Canadians will also feel the brunt of higher rates, according to the Ipsos poll. Forty-nine percent of Canadians aged 18 to 34 said higher interest rates could bring them closer to bankruptcy, while 41% of people aged 35 to 54 said the same. Additionally, Canadians under 55 are more likely to report feeling the effects of rate increases, including 56% of the 18-34 cohort and 57% of 35-54 year olds.

Inflation has also made life more expensive for Canadians over the past year, with 47% saying it’s harder to feed their families, 44% finding it hard to save money, 40% % having difficulty buying closures and other household necessities, 36% having difficulty getting around. needs, 35% have difficulty paying their housing expenses and 31% have difficulty repaying their debts.

Read: Inflation hit 5.1% in January, its highest level since September 1991

A full 81% of respondents said they would be careful how they spend their money, including 74% of Canadians who consider their financial situation to be excellent.

A quarter of respondents are unsure of the impact of interest rate hikes on their financial situation, and 20% of Canadians are concerned about their ability to absorb a one percentage point rise in rates. Of Canadians who rated their financial situation as “poor,” 67% are unprepared for rate hikes, while 51% of Canadians who will have difficulty repaying their debts do not believe they can handle a rate hike. a point.

Written by
Neil Sharma

Neil covered housing and real estate for several years as a Toronto-based journalist. Prior to joining STOREYS, he was a regular contributor to the Toronto Star, Toronto Sun, National Post, Vice, Canadian Real Estate Wealth and several other publications. Do you have a real estate history? Email him at [email protected]

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February 8, 2022: Mortgage interest rates continue to climb https://johnhesch.com/february-8-2022-mortgage-interest-rates-continue-to-climb/ Tue, 08 Feb 2022 14:00:00 +0000 https://johnhesch.com/february-8-2022-mortgage-interest-rates-continue-to-climb/ Jim Lane/Getty A number of mortgage rates jumped today to their highest levels since the start of 2020, including 15-year and 30-year fixed mortgage rates. We also saw a significant rise in the average 5/1 adjustable rate mortgage rate. Mortgage rates have been quite low over the past period, making it a good time for […]]]>

Jim Lane/Getty

A number of mortgage rates jumped today to their highest levels since the start of 2020, including 15-year and 30-year fixed mortgage rates. We also saw a significant rise in the average 5/1 adjustable rate mortgage rate. Mortgage rates have been quite low over the past period, making it a good time for potential buyers to lock in a fixed rate. But rates are dynamic and should continue to rise. Before buying a home, remember to consider your personal needs and financial situation, and speak with several lenders to find the best one for you.

30 Year Fixed Rate Mortgages

The average 30-year fixed mortgage rate is 3.93%, up 15 basis points from seven days ago. (One basis point equals 0.01%.) The most commonly used loan term is a 30-year fixed mortgage. A 30 year fixed rate mortgage will usually have a lower monthly payment than a 15 year one, but usually a higher interest rate. You won’t be able to pay off your home as quickly and you’ll pay more interest over time, but a 30-year fixed rate mortgage is a good option if you’re looking to minimize your monthly payment.

15-year fixed rate mortgages

The average rate for a 15-year fixed mortgage is 3.28%, an increase of 10 basis points compared to the same period last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. But a 15-year loan will usually be the best deal, if you can afford the monthly payments. You will most likely get a lower interest rate and pay less interest in total because you are paying off your mortgage much faster.

5/1 Adjustable Rate Mortgages

A 5/1 ARM has an average rate of 3.95%, up 18 basis points from a week ago. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 variable rate mortgage in the first five years of the mortgage. However, changes in the market may cause your interest rate to increase after this period, as stated in the terms of your loan. If you plan to sell or refinance your home before the rate changes, an ARM might be right for you. Otherwise, market fluctuations mean that your interest rate may be significantly higher once the rate is adjusted.

Mortgage Rate Trends

While 2022 started off with low mortgage rates, they have recently seen a rise. There are two major factors at play here: rising inflation rates and a growing economy. That said, rates can always go up and down for a variety of reasons. The spread of the omicron, for example, kept rates relatively low throughout December and into the new year. Overall, rates are expected to rise in 2022, notably with the decision of the Federal Reserve to reduce its bond purchases and to increase interest rates.

We use data collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders nationwide:

Today’s Mortgage Interest Rates

Rates correct as of February 8, 2022.

How to Find Custom Mortgage Rates

You can get a personalized mortgage rate by contacting your local mortgage broker or using an online calculator. In order to find the best home loan, you will need to consider your current goals and finances. Specific mortgage interest rates will vary based on factors such as credit rating, down payment, debt-to-income ratio and loan-to-value ratio. Having a good credit score, a higher down payment, low DTI, low LTV, or any combination of these factors can help you get a lower interest rate. The interest rate isn’t the only factor that affects the cost of your home. Also, be sure to consider other factors such as fees, closing costs, taxes, and discount points. You should speak with a variety of lenders – including local and national banks, credit unions, and online lenders – and a comparison store to find the best mortgage for you.

What is the best loan term?

When choosing a mortgage, you need to consider the length of the loan or the payment schedule. The most common loan terms are 15 and 30 years, although there are also 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. For fixed rate mortgages, interest rates are fixed for the term of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only stable for a certain period of time (usually five, seven or 10 years). After that, the rate adjusts annually based on the market rate.

An important factor to consider when choosing between a fixed rate and an adjustable rate mortgage is how long you plan to live in your home. For those planning on staying in a new home for the long term, fixed rate mortgages may be the best option. Fixed rate mortgages offer more stability over time than adjustable rate mortgages, but adjustable rate mortgages can sometimes offer lower interest rates upfront. If you don’t plan to keep your new home for more than three to ten years, an adjustable rate mortgage might get you a better deal. The best loan term is entirely up to your own circumstances and goals, so be sure to consider what’s important to you when choosing a mortgage.

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How to Improve Bad Credit and Get a Home Loan https://johnhesch.com/how-to-improve-bad-credit-and-get-a-home-loan/ Sun, 06 Feb 2022 11:10:45 +0000 https://johnhesch.com/how-to-improve-bad-credit-and-get-a-home-loan/ You may have saved enough for a deposit on a car or a house, but your dreams may be dashed at the last hurdle if your credit score isn’t up to scratch. If you need a loan for a major purchase, your lender will check your credit score to determine your reliability as a borrower. […]]]>

You may have saved enough for a deposit on a car or a house, but your dreams may be dashed at the last hurdle if your credit score isn’t up to scratch.

If you need a loan for a major purchase, your lender will check your credit score to determine your reliability as a borrower.

Get a good score and you can get the loan at a reasonable interest rate. bad score, and you might have trouble getting a competitive interest rate or a lender at all.

How to improve your credit score

If you have caused damage to your credit rating, the first step in redemption is to take responsibility and pay off all outstanding debts.

Experity director Clint Howen says contacting the organizations you owe is the first step to clearing the debt from your credit report.

“For example, if it’s an invoice with Telstra, the process is usually to go through Telstra and say, ‘Hey, I’ll pay off this debt, whatever is left, sorry. How can I take that out of my report?” he said.

If you’re having trouble paying overdue bills that affect your credit score, you can get a loan or use a credit card to help pay it off.

But if you go this route, be careful.

Mr Howen said that if you’re using a loan or credit card to pay off debt, make sure the limit is low; for example, if you are using a credit card, set the limit to $500 instead of $5,000.

“Yes, it works…but be as careful as possible because you can easily end up in a much worse position,” he said.

There are also professionals who specialize in checking your credit report, which can be a good option if you have several problems or need them fixed quickly.

To protect your credit score in the future, Fitzpatricks Private Wealth financial planner Gianna Thomson recommended paying your bills by direct debit to avoid missing a payment deadline.

Loretta Iskra, a professor at the University of Wollongong, said the resources offered by the government MoneySmart websiteand can help you improve your financial literacy and put you in touch with a financial advisor if you need one.

“Often people don’t know what they don’t know,” Ms Iskra said.

“So being able to ask someone else to give their opinion on what’s going on… [is needed] so they can understand the things that are more important in terms of spending and that impact their credit risk. »

How Credit Scores Are Damaged

A common way people hurt their credit score is by not paying even small bills, Howen said.

“Any type of subscription or plan you have, or bills you miss – it’s going to show up on your credit report,” he said.

He said most people get caught up in smaller bills they forget about, like telecom bills, which can haunt them for years.

Ms. Iskra said sometimes you might not even be at fault because a credit company may have accidentally duplicated an application from your credit report.

To make sure that’s not the case, you can check to see if anything on your credit report has been listed twice, she said.

Investors Choice Mortgages director Jane Slack-Smith said sometimes a demerit on your report might not even be yours – for example, you might take the fall of a roommate who didn’t pay the bill on time even though you gave him the money.

That’s why you should request a free copy of your credit report and review it carefully, Slack-Smith said.

You can access your credit report from a credit reporting agency free of charge once every three months.

You can also request a free copy if you have been denied credit in the last 90 days or if your personal credit information has been corrected.

But beware: if your credit report has been requested too many times, it could set off alarm bells for potential future lenders.

How a bad credit score affects your loan application

If you’ve defaulted on a loan in the past, it could automatically disqualify you for a loan from another lender in the future, Mr Howen said.

Even if you do end up paying the amount owed, it can take years for the default to be cleared from your credit report.

He said it could leave you stuck with “non-compliant” lenders who charge higher interest rates and are not regulated by the Australian Prudential Regulation Authority.

Ms Iskra said: ‘Having a good rating really allows you to have a better choice for a better range of options and to minimize costs wherever possible.’

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