How Many Options Do I Have for Housing Loan Repayment?

September 16, 2011 admin No comments

An applicant has several choices in terms of finding the most suitable housing loan, similarly there are a number of repayment options too which can be explored as per one’s financial capacity of making timely payments to the bank. Choosing the right mode of repayment allows the applicant to avoid any hassles or stress related to delayed loan installments. Let us have a look at the various choices of repayment:

Accelerated Payment plan – This particular mode of repayment offers an applicant, the freedom to increase his/her EMI (Every month Installment) in order to close the loan as soon as possible. Accelerated Payment Plan is most suitable for those who need monetary assistance from the bank on an immediate basis but posses the ability to repay the loan within a short period of time by increasing their monthly installments.

Step-up Repayment plan – Applicants who have a stable career are most likely to receive this particular repayment option from the bank. Here, the bank verifies, the applicant’s current professional details and accordingly sanctions a certain loan amount for purchase of a residential property. The EMI’s within this plan rise over time as and when the applicant experiences a subsequent growth in his career. Depending on the applicant’s professional career, the bank can also decide on sanctioning a higher loan amount.

Step-down Repayment plan – A complete contrast to the above mentioned repayment option, here the applicant’s EMI’s reduces in time instead of amplifying. Applicants who purchase a house at a later stage of their life normally use this repayment option mainly because of their approaching retirement age. Banks arrange for a Step-down repayment plan for an applicant after careful analysis of his/her current income and the remaining years of employment before retirement. The interest rate is fixed in a manner that the installments are within the payable limits of the applicant even after his/her retirement.

Balloon Repayment plan – This repayment option is very much similar to the Step-up plan, in terms of having to pay lower EMI’s at the initial stages of loan approval, although here the applicant is given a pre-determined repayment date on which the applicant is expected to make a one large payment to the bank which finally closes the loan. Some financial institutions may also allow the applicant to make 3 or more large or medium sized interim payments. In addition to being used frequently for housing loan repayment, this scheme is also considered as a viable option by several applicants for personal and auto loans too. One of the biggest advantages of utilizing the balloon repayment option is that it provides the applicant major relief from worrying about the constantly fluctuating interest rates. Money lenders mostly offer this option to applicants who require monetary assistance on a short term basis so as to be sure about timely repayment. It is recommended to select this repayment plan only if you have a great investment sense in order to gain sure-shot returns to pay-off the loan amount within the provided time limit.

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Commercial Bridging Loans

August 16, 2011 admin No comments

Obtaining financing for a commercial property can be made through conventional lenders, but sometimes bridging loans are needed to make the transaction happen. They allow you to pursue opportunities that are seen as too risky for traditional sources. These are especially popular when the purchase is needed quickly but the existing one is still on the market waiting to be sold. If you’re not sure you will get approved, then a bridging loan may be just what you need.

When does it make sense to apply for bridging finance? It will depend upon each situation, but below are some advantages, as well as disadvantages to help you decide if you should consider it:

Advantages

• Flexibility
• Fast closing
• No credit issues
The biggest reason typically used for these loans in a commercial setting is because of its ability to have a fast closing. When an individual or company is looking to secure profitable opportunities, it is important to have sources to be able to close the deal within a week and not having to wait 30 days as traditional does. Closing quickly and as soon as possible is very appealing to a seller, giving you a better chance to secure the deal.

Disadvantages

• Risky
• High interest rates and points
• Short terms
• Lower loan to value ratio

Bridging Finance versus Conventional

There are certainly reasons where it makes sense to use alternative financing. Conventional can offer lower interest and longer terms, but here are a few of reasons why you would choose a bridging loan:

• Personal credit score problems
• The properties have problems (i.e. low occupancy rate, high cost for repairs, etc)
• Fast closing is needed in days rather than waiting for weeks

Items needed for qualifying
When you are looking to qualify, the lender will be looking at a few things when considering you r deal. It’s important to especially have a solid exit as that’s how a lender will know their investment will be repaid and give them reassurance they’re making the right decision in providing you with the funds. These items are listed below:

• Approximate value (not purchase price)
• Location
• Exit strategy
• Collateral (typically real estate)

Examples of exit strategies

One item that lenders will be interested in and expect will be that you have a clearly defined exit strategy on how you plan to repay. These will differ from situation to situation, but here a few scenarios that a bridging loan will be ideal for:

• Waiting for a buyer to qualify
• Moving to a conventional and waiting for approval
• Closing is near completion and will finalize shortly in the future

Bridging finance is a great way to make a profitable transaction close, if your other options won’t take it. Commercial properties are a perfect place to go this route. There are usually lower loan to value ratios as this is what protects lenders. So if you are looking to close quickly on a deal, need flexible options, and want a source that will provide the needed cash, then this may be your answer.

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5 Hard Money Blogs Tips to Look For

August 16, 2011 admin No comments

When you are in the process of buying and selling real estate for a living, you know that there are times when a short term hard loan or a bridge loan is necessary to keep the ball rolling. However, you should also make sure you are getting the right loan for your needs and will want to know what information you will need to continue to have a successful business. Starting your research on hard money blogs is important.

Here are some things you will definitely want to find at a top notch blog site:

Definitions – In the finance game there are a lot of different words and phrases you will want to fully understand. For instance, knowing the difference between a hard money loan and a bridge loan will be significant.

Techniques – Top private capital lending blogs will have techniques as well as loan tips and trick on how to best pitch your loan to lenders. This information will help you to say the right things and how to position your loan in the lender’s mind for success.

Paperwork – You will be able to find the info you need so you have all your paperwork together. This will include paperwork on your collateral as well as the papers the lenders will need. Your collateral will be something like an existing property that doesn’t have a lien or a committed contract to ensure they’re covered.

Discussion – Private capital blogs will have sections that discuss the economy, the housing market as well as trends to look towards in the future. There may also be discussion about what Washington is doing as well as soft money discussion as well.

After Getting The Loan – Once you get your loan, there will be information about what you can expect and what you will need to do to have a successful completion of the loan process.

Information is the key to data mining a hard money blog. Take a look at the top blogs and read everything you find there. You definitely want to ensure you are as well prepared as possible when you finally take the steps to pursue a hard money or bridge loan. Fortunately, since the internet is as wide open and as easily available as it is, being able to find all that information is a very simple process. Take the time to do the research and you will have the success you are looking for.

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