Anyone taking a homeowner loan usually agrees to a certain
period in repaying the loan. You may decide how many months or years you
require to repay the homeowner loan depending on your repayment capacity. This
is how a homeowner loan is usually approved. What if you find yourself in a
position being able to repay the loan earlier? You may receive some unexpected
funds or get a bonus at work. What if you were to win the lottery? In fact, no
one knows when they are going to be
lucky. In a situation like this, is it
possible to repay your homeowner loan earlier?
This article provides some important facts for homeowners,
who are wondering whether they are able to repay a homeowner loan earlier.
Checking with Your Lender
A homeowner may want to repay a homeowner loan earlier in
part or full, depending on the amount of additional funds they receive. There
are many banks and financial institutions that permit homeowners to repay their
loans early. As a homeowner, the first thing you should do in such a situation
is to consult your bank. Inform them of your desire to repay the loan earlier,
in part or full.
The majority of financial institutions and banks would
definitely facilitate such requests from
homeowners. The bank would reduce the
amount of interest overall in such a situation. The bank will provide the
homeowner with an early settlement quote. This quotation will reveal important
details such as the reduced interest amounts, the amount of money you still owe
to the bank, any early repayment charges, the early settlement figure due to
the bank and the settlement date.
This quote is usually valid for 30-days. This
will give you enough time to consider the figures and decide whether you want
to go ahead with the early repayment idea. You will continue to pay interest on
the outstanding balance of the loan during this time.
Will You Have to Pay Early Repayment Charges?
As for the early repayment charges, the Consumer Credit
Regulations (Early Settlement) of 2004 permits the lender to charge up to
58-days of interest in the event that a client decides to repay the full
homeowner loan earlier. If you are closer to the end of the loan period, it
would not be worth repaying the loan in full considering the interest you'll
pay.
The aforementioned is a comprehensive overview of the
possibility of repaying a homeowner loan early.
The following video explores ‘home equity’ in greater detail
-
For a closer look at the benefits of repayment
debt earlier than anticipated, visit here - https://www.moneyadviceservice.org.uk/en/articles/how-to-reduce-the-cost-of-personal-loans
- For more information regarding secured debt and why lenders look for this extra level of security, visit the following article - http://en.wikipedia.org/wiki/Secured_loan
- If you would like to improve your chances of obtaining a substantial financial agreement, the following Guardian article offers some helpful hints and tips - http://www.theguardian.com/money/2010/mar/04/improve-chances-getting-mortgage
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