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/


How to Find a Bad Credit Mortgage

People think mortgage brokers Melbourne are not worth their time and yet they can be a vital importance for most home buyers. When bad credit looms, it feels impossible to find a mortgage that not only suits your financial situation now but also in the future. However, while it is a little harder it’s not impossible to find a great mortgage but of course, the type of mortgage you need might be slightly different than what you expected. For instance, a bad credit mortgage might be the answer to your problems rather than a traditional mortgage. The reason – it’s down to the fact that traditional lenders won’t always offer a mortgage for those with bad credit. Read on and find out how to find a bad credit mortgage today.

Choose a Bad Credit Lender

First and foremost, you cannot usually go to a traditional mortgage lender simply because you’re unlikely to be eligible. If you have bad credit, you have to change your entire thought process over how you approach a mortgage and which type of mortgage is suitable for you also. It would be nice to say all mortgages are the same but they are not. A mortgage broker can help you to get a good mortgage but even the type of broker you choose can be different too. You absolutely have to choose a bad credit mortgage lender so that the right type of mortgage can be found. These will be the professionals to turn to and it may make the entire process a lot simpler too.

Use the Services of a Mortgage Broker

If you are really unsure how to approach the mortgage process then its best you speak to a professional broker. Mortgage brokers are ideal simply because they have been trained in this area and have a great network of support also. What is more, brokers can do a lot of the hard work for you which are again ideal. They will help to find mortgages which are good for bad credit and that is suitable for your situation now and in the future too. To find out more, check out mortgagebroker247.com.au.

Understand Where Your Credit Really Is

While you can go in search for a mortgage you won’t get far without really knowing how bad your credit is. Now, if your credit is only slightly bad then you might be able to turn it around within a very short period of time and in that case you might want to wait until it’s a little better. However, if your credit is absolutely terrible then it will take potentially several years to fix. For those who don’t want to wait for their credit to become better, you have to take action now.  It’s really quite important to know your credit so you know which route to take and what is best for you now. If you really still aren’t sure after you’ve looked at your credit, talking to a mortgage broker might prove useful. They will be able to help you understand where you stand for a mortgage and which options are available. You could always talk to a mortgage lender or banker to see which options are open to you too.

Get the Right Mortgage

Buying a new home is an important and very big decision to make and if you don’t get the right mortgage you could end up with a bad mortgage and a very bad nightmare on your hands. This is not the dream you want so you have to take very careful time to think about which mortgage is best for you. Getting help from mortgage lenders and bankers and even brokers can help you to get the right mortgage. Talk to mortgage brokers Melbourne today and get the right mortgage.