By Charlie Fin

Simply put, the “cheapest” home loan or mortgage is the one that costs you the least over the term of the loan taking into account interest rates, fees and penalties. If you are looking for a cheap loan deal, here are some tips that could save you time and money:

Don’t assume that your trusty bank of 20 years is going to give you the best deal today because they offered you a great deal the last time you needed a loan. Today, there are a lot more home loan options than there used to be.

There are hundreds of home loans products available and shopping around could save you tens of thousands of dollars. The Internet has made comparing house loans fast and easy. With today’s online mortgage comparison tools, it is possible to identify a list of potentially suitable home loans in a few minutes. Comparing loans with the aid of these advanced tools is the smart and convenient way to find you ideal home loan.

Nowadays, prospective borrowers are bombarded with marketing claims of “discounted” or “low” rates. Often these so called “discount rates” may only be introductory offers or come with other fees and conditions in the fine print. It is important to look beyond the headline rates and see what you are actually getting. A good comparison tool could help you see beyond the hype and hidden costs.

Consider your particular circumstances carefully. One home loan product may be ideal for one borrower but may not be the best option for another. The terms and features specific to each loan product could make a huge difference to their cost over the term of the loan.

One way to reduce accrued interest is to make biweekly repayments rather than monthly repayments. An even better way to reduce interest is to take advantage of the offset feature offered by many lenders. Offset facilities allow you to deposit your spending money into a linked account, whereby the balance is subtracted (offset) from the home loans principal. This is especially beneficial if you have significant amounts of money coming into your accounts on a regular basis.

Redraw facilities, if used effectively, could also save you a great deal of money over the term of your mortgage. Every time you receive a lump sum of money or have any money left over, you could deposit it into your mortgage account, reducing the principal and therefore the interest. Then, when you need money for an emergency or unexpected expense, many good home loan products will let you take it out again without fees. Parking additional money in your loan is better than putting it into high interest accounts, which usually pay a lower rate of interest than the interest charged on home loans.

Conversely, even small penalties and fees can compound and be extremely costly over the term of the loan. Beware of fees and penalties such as monthly recurring fees, late payment penalties and redraw fees.

On a final note, beware of costly “exit fees” that may apply for several years after you take out a mortgage. Special introductory rates often come with severe penalties in the event that you pay off of the mortgage within a few years, and this could be a considerable burden if you are forced to sell your home.

By Suzanna Hardaway

If you have bad credit it may not be very easy to get a home loan. Though there are several companies and agencies which lend to such people, the rate of interest and other penalties will often be very high. Many people who have taken such loans have found it very difficult to make the repayments. However, if you want to get one of the home loans with poor credit, you can follow some simple steps to avoid problems down the road.

Before shopping for a home loan, you have to check your credit rating. Sometimes, you may not have a very bad rating. A score under 620 is considered poor. A score below 680 but above 620 means that there is a good chance that you can get a loan. When you have bad credit the best idea is to raise the score by making some repayments and keeping your account as current as possible. Also make a budget to identify how much you can pay off in monthly installments.

However, if you have too many debts, you will not be able to qualify for home loans with poor credit. So you will have to save some money for a larger down payment. The more you can pay the better the terms you will receive for your home loan even if you have a bad credit score.

By making a large down payment you will be in a position to show the lender that you have some responsibility in order to lower the monthly payment. You may have to pay a high rate of interest because of your low credit score. The only way of lowering the rate of interest is by making a large down payment.

Whenever you are offered any kind of loan you need to look at all of the points, closing costs, fees and penalties. That will help you to assess the total cost of a loan. If you have an extremely poor credit rating you can ask someone to co-sign. The person should have good credit. Do not fall into temptation and get something like an ARM, or adjustable rate mortgage loan. They have low monthly rates in the beginning which increase as national interest rates increase. You may have to pay larger amounts in the following years.

Before you decide on one of the offered home loans with poor credit, shop around to gather details, compare the terms of different lenders, and choose one which has a fixed rate of interest. Also, check the other fees and charges which need to be affordable for your particular budget.