Home Loans

Harley Finance

Introduction to home loans

A home loan refers to the amount of money rendered to an individual by a financial lending institution such as banks at a defined interest rate to be paid every month with the equated monthly installment. The company lending the money uses the home (property) as the security for the loan.

A borrower can use the borrowed money to purchase commercial or personal property depending on his or her needs. In case the lender fails to pay the dues, the lender can auction the property because he has all the legal rights to recover the loan balance that the borrower has neglected to pay.

How to qualify for a home loan?

Know your credit score

You should know your credit score and think of ways to improve it. Reviewing your score and credit history early enough will give you the necessary time to fix the errors, if any, before submitting your home loan application. This will help you to meet the lender’s score requirements.

Save Your Cash

Requirements for getting a mortgage keeps on changing, and if you are planning to apply for a mortgage, you should be ready to spend some cash. Lenders are willing to listen to home loan applicants who have some money. To qualify for this type of loan, you have to make a down payment.

Keep on doing your job

You should stick to your job while buying a new home. You should not quit the job because your mortgage is about to be approved. Changes in job or income can halt the mortgage process. So if you want to qualify for a home loan, stick to your job.

Different Types of Mortgages

When choosing a mortgage, you should not only consider the interest rates and the fees you will be required to pay. You should also learn about the type of mortgage you want. Mortgages are available in different types, so you have to choose one that you feel you are comfortable with. There are two primary types of mortgages:


The interest charged remains the same during the entire repayment period.

Variable Rate

The interest charged keeps on changing.

Fixed-rate mortgages

The amount of interest you pay will remain the same throughout the loan lifespan, irrespective of what happens to the interest rates.
Most lending institutions offer fixed mortgage loans for a period of two to five years with a specified interest rate to be paid for that period.

Variable-rate mortgages

The interest rates for variable mortgages keeps on changing over time. Because they are unpredictable, you should set aside some savings so that you can afford to cater to increased payments if there is a rise in interest rates.


Variable-rate mortgages are available in different forms. They include:

Standard variable rate

This is the typical interest rate that mortgage lenders charge homebuyers and will last for the entire loan repayment period or if you choose to take out another mortgage loan.
Changes in the interest rate can happen in case of a rise or a fall in the base rate.

Discount mortgages

This is also another form of a standard variable mortgage. Here the lenders offer homebuyers a discount off their standard variable rate and do not apply all the time; it only applies for a specified period which maybe two to three years.

Discount mortgage lenders are different, and that’s why standard variable rates are not the same across all the lenders. You should never mistake the discount with the interest rate.

Tips for getting better home loans

Are you planning to buy a new home or refinance the existing one? Getting the right home loan can save you a lot of money.
The following tips are meant to help you get the best home loans

Check your credit reports early enough

This is the first thing that should come into your mind even before you start home shopping. Try to find the amount of mortgage you can qualify from the lenders and what you can do to improve your position.

Scrutinize your credit to find out whether it has problems or errors. This will not give you your exact credit score, but the information contained in your credit report is what forms the basis for your rating. To fix errors, if any, can take longer, and that’s why it’s crucial to get started early enough before applying for a mortgage.

Meet with lenders

Once you are done with your credit score, the next step is to meet with mortgage lenders. Starting charts early ensures you are well prepared for the mortgage shopping and allow you to compare lenders’ rates. You should also request the lenders to inform you about the documents you will need to submit when applying for a mortgage.

Check your credit score

A credit score is different from credit reports. You should check your credit score and monitor what you are doing to improve it even if you are not prepared to make a purchase.
FICO scores are the most used when it comes to lending and banking.

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