What’s the Difference Between a Mortgage and an Auto Loan?

Two of the biggest loans you will ever take in your lifetime are loans to finance the purchase of your car and loan to finance the purchase of your home.

In this short guide, you will discover how these two differ from each other.

Read on to find out more…

The Credit Report Scrutiny

Before a mortgage lender can approve your mortgage loan, he will critically take a look at your three major credit reports. They are the reports from TransUnion, Equifax, and Experian. The aim of the mortgage lender is to identify cautionary signs that can mark you as being highly likely to default on your monthly mortgage payments.

Common signs they watch out for are; past bankruptcies, high credit card debt or late payments. In contrast, lenders for an auto will only look at one your credit reports when you apply for an auto loan. Thus, it may be possible that your auto financing will be approved with ease.

Your Bankruptcy Filing

If your credit reports have a lot of credit dings, it might be very difficult for you to be approved for a mortgage loan.

For example, a chapter 13 bankruptcy will remain on your credit report for seven years, while a chapter 7 bankruptcy will remain on your credit report for 10 years. If you’ve filed for different kinds of bankruptcies and they are still fresh in your credit report, most mortgage lenders will not approve your mortgage loan.

Lest I forget, a foreclosure will also remain on your credit report for seven years. But most auto lenders are willing to overlook these financial setbacks probably because the money they are lending out is comparatively lesser than the money being lent out by mortgage lenders. If you have this sort of credit in your credit report, applying for an auto loan might come with stricter terms and conditions, for example, higher interest rates. Read more.

Are You Willing To Tolerate The Risk?

Since auto dealers want to sell more cars, most of them don’t mind taking on additional risks when they lend to customers. As a matter of fact, they are more interested in lending to customers whose credit is far less than perfect.

Again, it is important for you to bear in mind that the terms and conditions will definitely be stricter than those for a person with a perfect credit. While auto  lenders are willing to take more risks than mortgage lenders, they charge riskier customers higher rates to protect themselves financially.

Your Proof of Capability

In this regard, there is no difference between mortgage lenders and auto lenders.

You will need paperwork to prove that you are capable of repaying your loan on time. Regardless of the type of loan you are applying for, expect to come up with a lot of paperwork. For example, both mortgage and auto lenders might require you to provide your bank account statements, tax returns, and your most recent pay stubs.

In addition, when you apply for an auto loan, you have to provide a proof of auto insurance or if you are applying for a mortgage, you have to provide proof of your homeowner’s insurance. The fact remains that before you can be verified to take a loan, you must provide the vital documents. More details in site: http://www.mortgagebroker247.com.au/homeloans/

 

Who needs mortgage plan protection?

mortgage plan

This is a question that each and every individual who has a mortgage should ask themselves; because with any mortgage the conditions available are meant to or hey are believed to stay fixed until the mortgage period ends. However, since there is no surety of what might happen tomorrow, the protection of a mortgage is massively important when you have one.

The protection is just an assurance in case anything should happen and the mortgage company won’t repossess your home for resale or rent; the home will undoubtedly remain yours with mortgage protection.

Mortgage broker Melbourne has a list of the various ways that you can protect your mortgages ranging from insurances to other forms of protection.

Having mortgage protection doesn’t necessarily mean that you have to take insurance, but other forms of wealth, such as liquid assets can easily act as protection for the mortgage loan. Mortgage brokers Melbourne help the client in acquiring the best loan that will not affect them even should a crisis happen, and will also assist them in choosing the right kind of mortgage protection for your personal needs.read this post here!

Hence the question, who needs mortgage loan protection? Basically, almost everybody needs protection over any form of loan they have, which acts as a guarantee that no matter what happens to your loan planning payments, it will not affect the ownership of the home/property.

The way a mortgage works, based on the information obtained from mortgage brokers, is that from the mortgage loan quote, you get you agree to work towards it and this is just like any other contract, where any form of deviation from the contract will result in a breach with serious implications involved. This violation usually leads to the mortgage company ultimately recovering the house in which the client was paying the loan on no matter how many payments the client has already made.

This is where the loan protection scheme comes into play. The protection ensures that the mortgage firm will not repossess the property even when the mortgage repayments can’t be made, because of serious personal issues, such as redundancy or long-term illness. Mortgage broker Melbourne provides their customers with various ways to ensure mortgage protection on the mortgage that they have.continue reading this http://www.businesswire.com/news/home/20160427005425/en/Incenter-Announces-Plan-Form-Mortgage-Focused-Broker-Dealer

mortgage plan

Mortgage protection, acts as insurance. The mortgage payer could at some time in their life, not be able to raise the required amount to pay for the monthly or annual repayments. The loan protection, therefore, acts as a second option that can cater for the repayments of the loan.

Through this, the property owners will not have to pay extra costs that will hinder or inconvenience the customer’s use of funds. Mortgage protection can be reviewed by mortgage brokers is that it is one safe way of ensuring that there is no possible repossession of their property due to unforeseen circumstances.