Archive for the Uncategorized Category

Debt Consolidation Loans If the thought of debt consolidation loans leaves you somewhat confused and bewildered, scratching your head and in search of meaningful answers then you are definitely not alone.  It’s a sad fact that the vast majority of us are simply unable to get from one week to the next without some type of borrowing or credit line, whether it’s a mortgage, a string of credit cards, unpaid items from the catalogue or even a dreaded payday loan. Of course, when you break it down to the simplest level, there are basically two types of debt that most of us get into.  These are the debts we can realistically afford to repay, and the debts that have seemingly spiralled way beyond control that we simply don’t stand a chance of paying back on time. What is a Debt Consolidation Loan? Debt consolidation loans are a relatively new type of borrowing product aimed at reducing your monthly outgoings by lowering the interest rate on existing credit and extending the repayment period as an additional means of helping you budget.  With debt consolidation, the idea is to simplify life without causing any unnecessary confusion. As a useful example, let’s consider an employee at a bank who has taken out a personal loan, makes regular, and sometimes unauthorized, use of his overdraft facility and also has a couple of credit cards that he likes to use to keep himself afloat until the next pay cheque arrives.  With these three credit lines alone, our friend at the bank has a total of four finance products to juggle around each month and the interest rate and charges are an additional burden that he has to deal with. With a debt consolidation loan, it would be easily possible to pay off the overdraft, settle

The Bank of England had waded into the rather heated debate regarding the long-term mortgage products many lenders are now offering. There’s been a distinct rise in the number of banks and building societies offering 30-year and 35-year mortgage repayment. Though supposedly to help bring down the monthly costs of repayment, the BOA warned that longer mortgage terms do little other than “store up problems for the future”. One of the biggest issues highlighted in the report was the way in which longer mortgage repayment periods could have a huge impact on the pension savings of borrowers. By extending mortgage repayments into old age, it becomes necessary to meet them with retirement funds which may already be stretched to their limits. But what was interesting was how the report didn’t highlight the way in which longer mortgage repayment periods also mean massively higher overall interest payments for the borrower. In the UK, mortgages have been offered with a standard repayment period of 25 years for several decades. However, as house prices continue to rise, borrowers have been seeking realistic ways of bringing down monthly mortgage bills, in order to get on the housing ladder. In response, banks are now routinely offering repayment periods of up to 35 years. But in doing so, the overall costs payable by the borrower skyrocket. Take for example a smaller loan of £100,000, charged at a rate of 4.5% with an initial charge of £500. Over the course of 25 years, monthly repayments would be around £556 and the total amount payable would be £167,250. By contrast, up this to a 35-year mortgage and while monthly payments are reduced modestly to £473, the total amount to repay increases to £199,250 – an increase of £32,000 and double the amount borrowed. In the case of a larger loan,

A Brief Insight on Secured Commercial Loans and Unsecured Business Loans If you are thinking of starting up a new business, or you are looking to expand an already successful corporate enterprise, the chances are that you will get absolutely nowhere and at light speed if you do not have access to the required type of financing you need. When trying to source suitable commercial finance, an applicant will typically achieve funding by means of at least one, but sometimes multiple, business loan(s).  When the time arrives, the borrower will ultimately be required to decide on whether to apply for a secured business loan or an unsecured commercial loan product. With this in mind, we need to understand the main differences between these two types of finance so that we can make an informed decision and take the most logical route. What are secured loans for business? A secured business loan is a long-term borrowing product that is available exclusively to applicants who are able to offer some type of collateral as security against the sum being borrowed.  In most cases, this type of finance is usually secured on a property or suitable commercial assets.  Although the borrower will typically use a commercially owned building or business asset as security, there are cases where secured business loans are taken out against an applicant’s home or primary residence. Provided you are entirely certain that you can pay the loan back on time, and in line with the terms and conditions set out in the agreement, a secured loan is often the most affordable type of financing available to the modern business borrower.  As the loan is secured against an appropriate property or business asset, the rate of approval is generally exceptionally high and your personal credit history and company finances will not be scrutinized

It’s not uncommon for buy-to-let investors to set their sights on properties in need of repairs and refurbishments. The reason being that as competition for such properties is relatively low, they can often be picked up at rock-bottom prices. After which, the repairs and refurbishments can be performed at an equally low price, before turning a profit on the property by letting it out to tenants. Unfortunately, targeting properties in need of renovations or refurbishments can lead to problems with financing the purchase. This is because the vast majority of traditional lenders will only issue mortgages against properties that are considered habitable at the time of the application. Even if you can demonstrate your intention and capacity to renovate the property after the purchase, you’re unlikely to qualify for a traditional mortgage. In addition, landlords often seek to expand their buy-to-let property portfolios by purchasing homes at auction. Some in need of repair, others perfectly habitable. In both instances, however, it is usually necessary to pay the full purchase price of the property (and any additional fees) within 28 days – sometimes sooner. Needless to say, this is nowhere near enough time to organise a traditional mortgage. Combined with the increasingly restrictive lending criteria of major banks for buy-to-let landlords, all of the above places prospective investors in a tricky position. A Flexible and Accessible Alternative This is precisely why bridging loans are fast becoming the new top choice for buy-to-let investors. A dynamic and flexible type of secured lending, bridging finance goes far beyond the limitations of traditional High Street mortgages. For one thing, most bridging finance specialists are uninterested in the condition of the property. Even if it is in a pretty sorry state of repair, it is of no real consequence to the lender.  Instead, the only thing that

 Bridging Loans: Securing Finance when Time is Critical Bridging loans are a specialist type of secured loan which can be particularly useful in time-critical situations. Secured loans in general can be quicker and easier to arrange than unsecured personal loans but the underwriting process can still be lengthy in the case of larger secured loans such as mortgages. Speed is one of the reasons why bridging loans have become the go-to finance product for both businesses and consumers in situations where turnaround time is of great importance. When time is critical there is perhaps no faster or more convenient option available than bridging finance. You will need to have sufficient security to cover the loan amount but the application and underwriting processes are generally much simpler than those of other types of secured loans. Specific instances where bridging loans are considered the ideal alternative to a traditional secured or unsecured loan: Fast Property Purchases One of the most common applications for bridging finance is purchasing properties at a bargain price, before your competition. Whether commercial or consumer, getting a great deal on a property often means snapping it up quickly while the opportunity exists.  Instead of waiting months for a traditional mortgage application to be approved, bridging loans can be paid out within a matter of days. Buying Property at Auction The same also applies to properties that go under the hammer at auction which can often be purchased for well below their market value. The only proviso is that you rarely have more than 28 days to pay for the property in full. This time frame is often out of the question with traditional mortgages but perfectly possible with a bridging loan. Urgent Business Expenses Businesses can face unexpected outgoings and/or higher-than-expected costs. Unfortunately, these unexpected costs often arrive at

Traditionally bridging finance is best defined as a short-term lending, often over a period of between four weeks and eighteen months but this can extend longer with the consent of the lender and sufficient documented reason. This type  of lending is commonly referred to as a bridging loan in the United Kingdom, it is also called a caveat loan and swing loan in other countries that offer the same type of financing. While the headline interest rate on bridging finance can seem fairly high, compared to traditional loans, this does not give a fair reflection of the bridging loans value and popularity  and the uses in the property market sector. UK BRIDGING FINANCE FACTS Many reports into the UK bridging finance market show some very interesting numbers on this often ignored area of debt finance. Some of the basic facts include:- • Average loan to value 45% • Average term of bridging finance 11 months • Average monthly interest rate 0.84% • A first charge was in place on 83% of bridging loans • A second charge was in place on 17% of bridging loans Many people will be surprised to see current interest rates charged by bridging finance companies compared to those of years gone by and how competitive the rates are. The most popular reasons for securing bridging finance are:- • Property refurbishment 27% • Mortgage delays 25% • Re-bridging loan 13% • Business purposes 11% • Auction purchases 9% • Other 15% While it is fair to say that the majority of bridging finance relates in some shape or form to property transactions, both commercial and residential, there are other areas in which it is useful. While these industry figures make for interesting reading, the situation for high net worth individuals/investors can vary markedly. Platinum Global Bridging