Getting The Hang Of Loan Lingo

Getting The Hang Of Loan Lingo

Getting the​ Hang Of Loan Lingo
If you​ are going to​ get a​ loan prepare yourself to​ be bombarded by all sorts of​ financial jargon .​
We find terms like Agreement in​ Principle and Adjustable Rate Mortgages to​ Credit History and Equity Release .​
No matter how you​ look at​ it,​ getting a​ loan is​ like getting a​ whole new education .​
If you​ feel that you​ have a​ decent command over the​ English language,​ just try asking a​ mortgage salesman for loan advice .​
Once it​ is​ all over,​ you​ might just come home feeling like a​ truck full of​ financial jargon crashed into you.
However,​ it​ really is​ not all that difficult when you​ look at​ the​ basics .​
For instance,​ Agreement in​ Principle is​ simply a​ roundabout way of​ describing the​ agreement that is​ made between the​ lender and the​ borrower regarding the​ amount of​ money that will be lent .​
To a​ large extent,​ this amount would rely on​ aspects like your credit history,​ the​ collateral that you​ are offering,​ and your current income among other things.
Are you​ already feeling a​ little overwhelmed by all this jargon? Why don't I​ just simplify things a​ little more for you? Credit history refers to​ whether or​ not you​ have repaid loans that you​ had taken earlier .​
If you​ have been a​ defaulter on​ a​ previous loan,​ you​ have a​ bad credit history .​
If you​ have not defaulted,​ you​ will be said to​ have a​ good credit history .​
At this point,​ keep in​ mind the​ thought that a​ bad credit history will haunt you​ for the​ rest of​ your life when it​ comes to​ getting loans.
Collateral refers to​ the​ asset (usually property) that you​ use as​ security to​ procure a​ secured loan .​
An unsecured loan requires no such collateral .​
If you​ haven't yet purchased any property,​ but are wanting to​ buy some,​ you​ will find all kinds of​ mortgage terminology like Adjustable Rate Mortgages .​
This is​ separate from Fixed Rate Mortgages where the​ interest rate is​ fixed no matter how the​ market reacts .​
In an​ adjustable rate mortgage,​ the​ rate may vary based on​ the​ market conditions .​
These days,​ one can make use of​ mortgages that have a​ combination of​ fixed and adjustable rates.
If you​ already own a​ house,​ but are paying mortgage on​ it,​ Equity Release might be the​ right choice for you​ .​
Equity means the​ difference between the​ value of​ your home and the​ mortgage amount that still remains due .​
Free this equity by taking up a​ home equity loan to​ fund some of​ your other expenses.
You would benefit if​ you​ familiarized yourself with some financial jargon before you​ started loan shopping .​
This will make you​ a​ lot more prepared to​ choose the​ best loan!

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