Tag Archives: Loans

Deciding to buy a house generally make people feel a lot as they have to face several decisions to choose the right way to do so and there are many options that are needed to be considered. The real estate market options and offerings continues to expand and provide consumers with a wealth of opportunities that are not readily available. If you are applying for a home loan and you are confused about it, then it is quite normal as applying for a home loan is a frustrating experience for every prospective home buyers. There are many people who don’t know the first thing about getting a mortgage loan and often get misled by false advertisement and opportunities.

If you are confused about taking the first step, then here are some mortgage tips in mind:

1. Start with your credit report

The first thing lenders will probably do when you apply for a mortgage is to check your credit; you should do that too. There is no better time for a regular credit check than when you try to prove your creditworthiness to a lender to get the best possible rates. You want to make sure that your credit report is as accurate as possible, that your scores are where you want them to be, and that no one else has access to your credit, which could affect your scores.

2. Next, get your affairs in order

Once you’ve regularly monitor your credit report, you can see how you’re doing. Challenge any inaccuracies with the three credit bureaus and get everything cleared up. If your debt-to-credit ratio is too high, monitoring your score over time will show you how your score might change. If you see accounts, you haven’t opened or addresses that aren’t yours, take immediate action to investigate what could be identity fraud.

3. Do your homework

Yes, the word “homework” makes us shudder too, but this time the reward is far greater than memorizing geometry theorems or the periodic table. You find a house, but you also make a financial commitment that you will have to live with for years: getting the best possible price. Research loans, rates, and brokers thoroughly before you sign or commit. If you do most of the work now, you’ll be rewarded later with a better rate and better terms.

4. be realistic about what you can afford.

Homeownership may be the American dream, but it’s also about keeping a foot on the ground. If you’re looking for a rate that will require a 20% down payment and you only have about 5%, do your calculations based on the rate you can get.

5. Understand how lenders work

Your credit rating, on which lenders base many of their decisions about your loans’ amounts and rates, reflects their confidence in your ability to repay them. In short, the higher your credit score, the easier it will be for you to get the amount and rate you want.

6. Decide how you’re going to finance it

Once you’ve researched the types of financing available, determine which one is best suited to your financial situation when you buy a home: a 15-year or 30-year mortgage, adjustable or fixed. If you’re looking for security and a guarantee that payments won’t increase, a fixed-rate mortgage may be the solution. If you think mortgage rates may still fluctuate and you want more flexibility, consider a variable rate mortgage.

7. The more extensive your down payment, the more options you have.

See number 4. It is essential to be realistic. So, within a realistic framework of what you can afford, the more you commit, the better your terms. The days of zero down payment, especially for a mortgage, seem to be coming to an end. By making a larger down payment upfront, you make sure you pay less each month.

8. Check the prepayment penalties

Another thing to keep in mind when looking for the ideal mortgage is whether you will be penalized for paying off the loan early. Some homeowners double their payments by the end of their term sooner – either regularly or with a cash windfall. Check and make sure you won’t be penalized if you reach your goal early!

 

 

Florida’s mortgage financing market is one of the most complex in the country. That’s why you need a team like Sunland Capital Mortgage Corporation to help you successfully navigate the complexities of the mortgage financing process. Call now for more details.

A few years ago, most people’s life plan consisted of a relatively common and uniform project: Study until you get a degree, start a family, and keep a good job until retirement age. Simple, safe, quite comfortable and predictable. And most of us would often ask ourselves: what should I study? In which company do I apply? What additional incentives can I apply for? The space for uncertainties or innovative thinking was minimal, if not nil, and was limited to making proposals (and crossing your fingers) with one or two improvements to the work environment or the company’s products and services for which you worked.

Fortunately, times and people have changed synergistically and based on that; the tendency to undertake has taken hold. It’s no longer rare to get someone to look favourably upon exploiting your own small business ideas. In other words, now it has become very rare to find someone who wants to stick to the traditional plan and leave the idea of ​​starting their own business to others. Even those who combine both visions to obtain an intermediate version with the best of both life plans. For these people, the predominant questions are others: What do I invest in? What business ideas pay off the most in the shortest time? How much money do I need to invest? Let’s check it out!

Personal trainer

Is life fitness your thing? Are you happy sweating and moving your body? Then becoming a personal trainer is ideal for you. This idea to start your small business is perfect for you if your willingness to help others and your voice of command is combined with a certification. A growing trend is quite popular in all sports disciplines that are also marketed very well on Social Networks and can lead to other related businesses, such as healthy meals and healthy eating and life coaching.

Local Delivery Services

Yes, the big courier and package delivery companies are still there, and they are not going anywhere. However, nothing better than a private motorcycle, car or bicycle to deliver packages locally, quickly and efficiently, and at a lower price. Every day more people add their personal means of transport to help avoid the bureaucracy and slightly more expensive rates that use a more recognized courier and delivery services.

So, the image of a person in shorts uniforms delivering packages no longer dominates the market. And it makes sense. The field of work has expanded thanks to many others’ entrepreneurship, and thus, other small entrepreneurs do not have their own home delivery service. The individual needs lunch or a pair of shoes to be brought to him because they’re stranded somewhere. There you fit perfectly. If you also add the services an application, then your business opportunity goes to the fixed. Make yourself known and start pedalling.

Food Trucks

In Latin America, the big business of preparing and shipping fast food from a truck has been part of the picture forever. However, new trends and market demands add differentiating elements that you can use to introduce your own successful business idea and make it extremely profitable. Do you prefer sweets rather than fast food? A waffle and cupcake food truck is perfect for running too! In any case, investing in a food truck does require a little more investment, study, preparation and compliance with laws and regulations. Among them, you must specify the point where you will put your truck, the demand for similar businesses at that point, and the permits related to the handling and sale of food.

Manager 

Many people who keep office hours or are dedicated to their own ventures lack the time necessary to do personal errands such as going to the bank, taking clothes to taking clothes from the dry cleaner, buying food for the week, etc. In some Latin American countries, taking care of these tasks is called an agency and whoever executes it is called a Manager. It is usually an occupation that leaves good money since the services can include everything from going to Notaries to picking up movie tickets and the like. Having an agency that places a manager at third parties’ services is an idea for a small business that promises to emerge in the coming years.

Personal Shopper

This is the most stylish and elegant name for Personal Shopper. A personal shopper is generally in charge of choosing, purchasing and delivering clothing and footwear for special events. However, some hire services to take care of the entire wardrobe, without obeying a special occasion. More than an investment, what you really need to become an excellent personal shopper and make your business successful is to have a good eye and sensitivity to choose the best clothes and shoes for your clients, and take care of details related to finances who entrust you with their wardrobe. Start with your friends, and get them to spread the word. Then you can open your own blog or website and share tips related to your niche. If you are persistent and dedicated, you will soon be hiring and training others to make your small business idea a trustworthy personal brand.

On the other hand, the Internet has given way to a whole new range of jobs that began to exist only a couple of decades ago and have emerged a lot in recent years. What is unique about this line of employment is that they do not require the employee and even the employer to satisfy the demand for services, and most importantly: Each one in itself represents a successful small business idea to manage from the comfort of your home.

Now that you have decided which industry you want to start a business in, you can begin the journey of becoming an entrepreneur! Check out the second part of this article here!

There’s a whole lot of reasons why financial institutions do not approve a loan application. The reasons for this are considered strategic and confidential, but knowing the most common causes is easier to find out why your loan has not been approved. Below is a list of reasons why you may not have your loan approved:

Incorrect or Outdated Data

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Many people provide incorrect and outdated data at the time of the request. To find out if this was your case, evaluate if there was an error concerning your income information, home address or even bank details. You must provide your own aligned and updated information, as the institutions perform an analysis of your order and will undoubtedly identify this data inconsistency. Never use third party data to apply for a loan application.

Failed to Pay Previous Debts

A negative CPF is synonymous with having a bad name, a poor reputation, which means you have a debt that you have failed to pay. If you are restricted when you apply for the loan, your application will likely have more difficulties to be approved by the banks until it settles the pending issues. “But, my name is clear, and I can’t get a loan anyway.” That’s because the negative CPF is not the only reason that can cause the refusal. 

Payment History

This is one of the main points that financial institutions consider when deciding whether to approve the application and determine the interest rate and limit. The better your payment history, the more likely you will be approved and receive the best interest rate. If you have a history of overdue accounts or negotiating debts, you may be subject to credit disapproval even if you are no longer in arrears.

Payment Capacity

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You must have and prove your ability to pay the loan amount requested. Ideally, the value of each installment of the loan does not exceed 15% of your gain to maintain your financial health. The greater your ability to pay, the greater the chance that your application will be approved, and the loan amount will also be higher.

Loan Amount

If your debts exceed 30% of your monthly income, there’s a greater chance that the institution will grant you a loan. When it comes to long-term loans, the bank’s options of not releasing the credit increase too; that’s because there will be a greater chance that things get out of control!   

Profile

Your employment relationship and marital status are also factors that can influence when applying for a loan. For this reason, public sector workers, who have greater job stability, tend to find it easier to ask a bank for credit, in the case of so-called ‘payroll loans.’

Economic Crisis

When the country’s economy is going badly, banks may decide to grant a smaller number of loans due to the pessimistic scenario. That’s because the institutions seek to reduce the level of risk they can take. If the expectation of default becomes higher due to an estimate of an increase in the unemployment rate, fewer customers will be able to access credit.

Score

The term ‘score’ has become increasingly known among Brazilians, mainly for the work done in recent years by credit bureaus. The word refers to a statistical score given to consumers, which is based on market data to know the chances of default in the coming months. For example, a consumer may have a very high score, but his income commitment is also very high. That can result in the application being denied, as the loan portion would not fit into your budget. It is worth remembering that not all financial institutions use the same score data when assessing whether to make the loan or not.

Analyze Your Financial Situation

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Before seeking a loan, consider whether you really need the money and how it will be used. If it’s not an emergency, it’s best to save until you get the capital. Knowing your financial situation is key to determining how much money you spend each month and where you spend it. Knowing the total of your mandatory expenses (such as a mortgage, schools, supermarket, etc.), you can calculate with an estimate of the fee that you can assimilate. Also, analyze how much you spend on leisure and if you can reduce these costs. Try to leave a margin for the unforeseen. 

There are always unexpected expenses, so it is advisable to leave a monthly margin when that time comes. It does not matter if this margin is minimal since unforeseen events do not occur every day. This analysis is not easy, but you can find free applications that can help.

If you’re reading this, then the chances are that you need financing to either buy a car, make reforms, get married, or pay for your studies. The point is that whatever the reason for which you need money, you should keep in mind the following recommendations. Knowing these recommendations will help you choose more wisely and avoid wrong choices. Need a loan in Toronto? Get in touch with DLC Estate Mortgages INC today! Backed by a decade of experience in the mortgage universe, they’ll guide you through your loan processes and help you determine if now is the right time for you to refinance!

Whether it’s a financial emergency or getting out of a growing debt load, a personal loan can help in a broad range of ways. It’s the fastest way to get usable cash without having to hold valuable collateral. However, a personal loan is one of the most expensive forms of lending because no assets or banks will back it up. If not managed properly, a personal loan can do more harm than good. As a wise borrower, you should keep these ten elements in mind before applying for a personal loan.

Take a Closer Look at Your Finances

This advice applies not only to personal loans but to all types of borrowing. You should consider your current and future financial situation before taking out a loan. A personal loan may seem like the perfect solution for your financial emergency, but if it is not managed carefully, it can disrupt your finances. 

An EMI calculator is useful for this purpose. Simply enter the amount of your loan and the interest rate to find out the EMI you have to pay each month. Prepare a budget to find out your monthly expenses and savings. You need to ask yourself if the new EMI can fit into your monthly budget.

Is My Credit Score Good Enough?

Before you start applying for a personal loan, it’s crucial to know your credit rating to make sure you are eligible. Since assets do not secure a personal loan, credit criteria can be even stricter.

Unlike secured loans, where the value of your collateral becomes a fundamental factor in determining your credibility, a credit score is considered the most critical factor in personal loans. Your credit score shows your credibility as a borrower and helps the banks decide how much risk you represent for them. People with a good credit score are likely to obtain loans at a more competitive interest rate.

Ensure Your Loan Purpose Is Allowed

While personal loans are open and can be used for several purposes, not all lenders allow your loan to be used for just anything. For example, you may not be able to use your loan funds for expenses related to high school education or your business. Check with your lender to make sure that you can use your funds for whatever you need.

Determine the Amount Wisely

It’s never recommended to borrow more than you need. Analyse the purpose for which you need the loan and then calculate how much you will need. The bank may be willing to give you a more significant amount if they find that you’re more creditworthy. However, it is not advisable to exaggerate the amount. A more considerable amount means more debt and higher interest payments. So borrow only as much as you need.

What Are the Different Alternatives?

As mentioned earlier, the interest rate on personal loans is higher than the interest rate on loans secured by assets such as gold, property, a vehicle or anything else. The gold loan or complementary real estate loan can be attractive alternatives to personal loans at comparatively lower rates. 

The interest rate on personal loans can range from 16% to 24%. But if you opt for a supplementary home loan (if you have an outstanding home loan), you can get lower interest rates starting from 9.50%. You should explore the possibilities of secured loans if you are willing to give a property as collateral. 

Think About the Worst Case Scenario

Before signing on the dotted line, you should think about the impact it would have on your financial situation if you could not afford to pay your EMI on time. Defaulting on a loan not only results in an accumulation of debt on your head, but it also has a direct impact on your credit rating. A single missed payment can lower your credit rating, and a complete default would wreak havoc. It is, therefore, advisable to think about your future finances and act accordingly.

Have a Thorough Look at the Fine Print

Although banks are required to disclose all significant fees, you still need to read between the lines to see how this works best for you. There are several things to consider here, such as processing fees, the length of the loan, cancellation or foreclosure fees. These hidden fees, if not taken into account at the beginning, can catch you off guard later on. So read the terms and conditions; don’t rely on bank officials for full details. Do your research and make a wise choice.

Verify Your Details

Before hitting on “Submit”, check your request. Missing even minimal details could result in rejection. If a lender cannot verify your data, they will not be able to offer you a loan.

Should I Get a Personal Loan?

If you have a budget, a personal loan can be a smart way to finance a project or consolidate debt. Although a personal loan is not free – you’ll pay interest in addition to the principal – staggering payments could allow you to take a vacation or renovate your kitchen when you might not otherwise have the opportunity.

Before applying for a personal loan, ask yourself if your budget allows you to make regular monthly payments and if you are willing to spread them out over several years. Be sure to look for a reasonable interest rate and use a personal loan calculator to get an idea of how much you would pay each month. Need a personal loan for your business in Melbourne? Kingsley Finance is worth considering! They offer tailored personal loans to give your business the boost it needs to flourish.

Having fun and purchasing a home are two phrases that are rarely used in the same sentence. Buying a home is a major investment, and the process of securing a mortgage and negotiating a price is complicated. Most buyers are unaware of the confusing steps that are involved but don’t worry.

Step 1: Assess your finances

This step determines the buyer’s ability to afford a home. The buyer may want to consult a financial adviser as to the strategy he or she may employ in paying for a home. Assessing your finances is important, especially if the buyer has a troublesome credit history and other financial obligations. The buyer must also reach a compromise between payment capability and desired property.

Getting a letter of pre-approval shows the seller that you are serious about buying a home. This certificate assures the seller that you have have enough money to buy their property. Securing a Pre-Approved certificate would range from a few days to a few weeks, depending on the status of the request. It’s worth the trouble of waiting, especially if it increases your ability to reach a fair compromise on price.

Step 2: Survey the Market

With the explosion of information, it becomes more exciting to search for possible properties. Newspapers, advertisements, referrals, brochures, and even the internet all give the buyer more choices and better options. Buyers should take full advantage of this information glut to facilitate his or her decision regarding a house. Remember, real-estate agents search for new homes daily. Use this knowledge to find your “dream home.”

Step 3: Learn from Others

If the buyer is a first-timer, he or she does not have to make the common mistakes first-timers commit. He or she should contact people who have been in the same circumstance and learn from their experience.

Step 4: Find a Suitable Agent

Considered as one of the most underestimated yet important aspects of home buying. Most buyers end up with an agent by sheer accident. It would do well for the buyer to do research and contact an agent whose strategy and skills fit the buyer’s needs. Buying or selling a house is a thrilling experience. But connected to this is a stressing and overwhelming job. This calls for an excellent real estate agent.

Verifying the real estate agent’s license is very helpful. It pays to be very cautious because this involves the property! This includes their state license in selling a property. Ask for the previous homes sold for a client.

Develop good chemistry with your agent. An agent understands what is important to you when searching for a property, and when negotiating with the seller. The agent should be able to tell their client the true worth of the property. Meet with your agent frequently so they can keep you up to date about new properties. A skillful agent can save the buyer a great deal of trouble and is instrumental in a successful sale.

Ask friends and family who they have used in the past, and ask them if they would use the same agent again in future transactions. Trusting your agent will save the buyer from a great deal of grief later.

Step 5: Close the deal

A great deal of discussion and paperwork is in involved in closing a deal. However, if the preceding steps were accomplished well, this step will be taken care of. Here, the buyer and the seller come to terms with the financial details, paperwork, and other details vital to the sale. By properly planning and educating yourself, you will now be the proud owner of your dream home!

House shopping can be stressful, but implementing these tips can remove some of the roadblocks on your path to finding your dream home. How can you use these tips to make your search smoother? Ready to start your journey to your new home? Sunland Capital Mortgage has over 20-years experience helping people find a home they love. Contact them today to learn more!

We’ve all heard about refinancing, but only a few are aware of its benefits. If you’ve never come across this word before, let me briefly throw some light on it (without sounding like a dictionary or Wikipedia). Mortgage refinancing is simply a strategy of paying off a mortgage with a new loan (pretty much repeating the original loan process) but on more recent and favourable terms.

If you’ve maxed out your current bank loan limit and are looking for a better alternative to lower your mortgage payments or pay off your mortgage faster, refinancing may be the answer. In addition to helping you solve your financial problems, it has many other perks that not only help you achieve your goals but also make your life much more comfortable. But how? Buckle up for some of the best benefits of this intriguing strategy!

Much Better Mortgage Rate

Rates are significantly low, making it the number one reason that many people choose to refinance. If mortgage rates have gone down by the time you’ve taken out the loan, it’ s often possible to save money by refinancing your mortgage into a new home loan at current rates.

Save Some Bucks

Did you know refinancing saves homeowners an average of $4,264/year? A lower rate is synonymous to lower payments, meaning you’ll generally pay less for your home, especially if your refinanced mortgage matches the same payment date as your old mortgage. You can also minimize your month-to-month payments by extending the repayment date beyond what it is now. By paying less each month for your mortgage, you also free up extra cash in your budget that you can put into your savings accounts!

Bid Farewell to All Your Debts

It’s indeed a sad reality! Most of us struggle with daily or monthly payments because of our loans or leasing and want to consolidate our respective debts as quickly as possible. Thanks to cash-out refinancing, you can use the funds to pay off all your debts, be it a student or your car loan. Alternatively, you may also use the extra funds to finance renovations, wedding expenses, emergencies or perhaps simply enjoy a well-deserved family vacation!

Stabilize Your Loan Payouts

For those of you who currently have a variable rate mortgage and want more predictable monthly payments, consider refinancing your loan with a fixed-rate mortgage. Depending on the level of risk you are willing to take and your current and future financial situation, switching from a variable rate mortgage to a fixed-rate mortgage may be the ideal solution for you. This way, you don’t have to worry about seeing your monthly payments increase even when rates start to rise. Most people choose to switch from the first to the second, especially when interest rates are rising.

Own Your Home Sooner

There is no better feeling than owning a house much faster! From credit cards, loans, car payments and all the other financial obligations you may encounter, having one less monthly payment to deal makes you feel much more in control of your finances. Refinancing can be a great bonus if you want to pay off your mortgage debt at a faster time. If you have a 30-year loan, refinancing over 15 years will allow you to own your home much sooner. Moreover, if you proceed this way, you’ll have the opportunity to increase your home equity in a jiffy!

Your Plan B for Unforeseen Events

Refinancing can be of a helping hand in dealing with unexpected and uncontrolled situations. No one wants to dwell on tragedies involving severe injury or even death. However, knowing the options available to you in an emergency can ease your mind.

Scale Up Your Business

Regardless of whether you’re consolidating debt or have chosen to switch to a fixed loan, lower interest rates could translate into increased cash flow. That money could serve as a source of reinvestment in your business and help it prosper. You must be aware of specific elements when deciding to refinance, such as hidden costs or high penalties for late payments. Do your homework in advance and make the right decision for the financial future of your business.

Taking A Person Out of a Mortgage

Sometimes, usually after a divorce, a person who initially took out a mortgage is no longer held financially responsible for the loan. The only way to get him or her out of the pledge is to refinance it. Refinancing could also help delist a co-signer whose support is no longer deemed and who would like to be freed from his or her responsibility.

If you haven’t had a home and mortgage for a while, this may be an excellent time to at least consider refinancing your house loan. Explore your options to make the best decision for you, your finances and your home. Contact DLC Estate Mortgages INC today! With more than 10 years of experience in mortgage services, they will guide you through the home-buying adventure and help you determine if now is the right time for you to refinance!

Sowing the seeds of your own business can get you at your wit’s end but can be arguably one of the most enriching and empowering experience you’ll ever have. On top of being exciting, being your own boss can actually free you from an unfulfilling, dull job and turn your life around forever. Of course, jumping yourself into the deep end of the start-up pool involves all sorts of high-stakes risks and requires enormous commitment, energy and boldness! Taking the plunge in business can be significantly less daunting once you’re clued-up on all the smart, easy-breezy tips. To help you make your way to a successful business, we’ve jotted down some of the most practical pieces of advice that will totally rock your sales! (Thank me later!).

Keep It Simple!

You don’t need all the bells and whistles of a giant corporation. Try to start small, narrow your focus and cut unnecessary features that water down your offerings (and break the bank). Be careful not to let your concept snowball into something overcomplicated. Otherwise, you could end up with a costly, elaborate end-product that nobody wants to buy. Create a simple, high-quality service and learn how to test your business idea. A successful business idea should fulfil promises to customers and exceed expectations.

Be Fired Up About What You Do 

The number-one ingredient in a successful business idea is passion. Whether your business consists of creating pottery, running fishing charters or providing financial advice, you have to enjoy what you do genuinely. Of course, you don’t necessarily need to love every aspect of your business (and you probably won’t), but you do have to be passionate about it. Passion will consistently drive you to improve the growth of your business (that said, don’t let it take over all your decisions). Let your dedication hit the gas pedal and your mind control the steering wheel.

Since you’ll devote most of your time and energy into making your enterprise a successful one, you’ll have to be honest to yourself and make sure you’re on the right track by asking yourself the right questions! Do you have what it takes to surmount all the hurdles and the determination to stick it out over the long run? Do you feel the excitement when you think of the business? Is it worth the sacrifice of your time and money? If your answer is “no” to any of those questions, then it probably isn’t right for you.

Refine Your Idea

If you’re thinking about starting a business, you likely already have an idea of what you want to sell, or at least the market you wish to enter. Do a quick search for existing companies in your chosen industry. Learn what current brand leaders are doing and figure out how you can do it better. If you think your business can offer something other companies don’t (or deliver the same thing, only faster and cheaper), you’ve got a solid idea and are ready to create a business plan.

Write A Business Plan

This is a far-reaching step before kicking off your business, as it provides you with invaluable information and can help you avoid pouring your time and money into something that will not succeed. Once you have your idea in place, you need to ask yourself a few overriding questions: What is the purpose of your business and your end goals? How will you finance your start-up costs? Who is going to buy your product or service? These questions can be answered in none other than a well-written business plan. 

A lot of mistakes are made by new businesses rushing into things without pondering these aspects of the company. Creating a business plan will allow you to have a more unobstructed view of both operational and financial goals – providing crucial budget and marketing strategies. 

Be Creative!

Keep exploring new ways to enhance your business and set it apart from the rest. It’s okay to admit that you don’t know it all and be open to fresh ideas and new perspectives for your venture.

Make Some Sacrifices

Launching an unsuccessful business idea is a reality for many entrepreneurs. Over half of new enterprises fail within the first five years of opening.? How long can you live without incoming money? Not long, and it may be a while before your new company actually makes any profits. 

It’s a good idea to come up with a “just in case the worst outcome happens” plan. If you want to start a small business, don’t quit your nine-to-five job—yet (or get a job-on-the-fly). Being employed while you’re starting your business means you will have money in your pocket for investment and will ensure you can keep up with your monthly living expenses. You might also have to go without the comforts you’re used to. Once you have a healthy inflow of cash from your company, you can tackle business ownership full time.

Get Your Money Lined Up!

Once you have a grasp on all your expenses, start to create a business budget. At first, you might need to get some outside capital to make ends meet, like a small business or start-up loan. Go over all of your options before putting your money into the start-up. You can also contact Kingsley Finance to apply for a business loan! Whether you’re starting up a business or you own one, they have the right commercial finance solution for your situation!

A commercial loan simply refers to a sum of money borrowed from a financial institution or bank by a business. It is a debt-based arrangement that medium-sized businesses defer to as it can help the businesses stay afloat and can also maximize business profitability. Out of the various types of commercial loans out there, below is a list of the 7 most common types you may come across:

1. Investment Loan

What Is It?

In simple terms, investment loans can be explained as a type of loan that is taken to invest in something else. It is an amount of money that a financial institution or a bank to finance a specific project. Secured by a mortgage on the investment property, the investment loan requires that the applicant repays both the principal loaned and the interests.

Why Get an Investment Loan?

With investment loans you’ll have enough money to spread it across a variety of investment projects, hence diversifying your investments. Borrowing to invest can also grow your wealth at a faster rate as the size of your investment portfolio can be drastically increased. The bigger the portfolio, the higher the chances of increasing your wealth.

2.Development Loan

What Is It?

Development loan, or property development finance, is a commercial loan that offers businesses funding for either major new building projects or comprehensive renovations. These projects are not limited to new housing estates or luxury homes, but also include office blocks and old blocks converted to flats. Think residential, commercial and mixed-use property.

Why Get a Development Loan?

This is the perfect loan to get if you want shorter repayment terms when undertaking a conversion project of land into a property. Unlike mortgages that can last years, the repayment period for property development loans can be anywhere from 3 months (for simple projects) to 18 months (for larger ones).

3.Equipment Loan

What Is It?

Equipment loans cover all purchases and borrowing of a business. Whether it’s for the acquisition of hard assets or to borrow a physical assert, this type of financing caters to specific types of businesses and equipment. Unlike with working capital loans, the asset you’re purchasing will serve as a kind of collateral.

Why Get an Equipment Loan?

The purpose of equipment loans is to help businesses acquire expensive equipment that they can’t afford to buy upfront. It is also helpful when you want the latest technology, or have to replace equipment that has a relatively short lifespan.

4.Debtor Finance

What Is It?

This umbrella term refers to products that finance invoices, the most common of which are invoice factoring and invoice discounting. If a company is not receiving payment from their clients soon enough, the bank can fund slow-paying invoices.

Why Get Debtor Finance?

If your company offers 30- or 60-days terms to is customers but you cannot afford to wait 60 days to receive payment, debtor finance is the way to go. It’s the perfect solution for companies that are experiencing cash flow problems as it will enable the manager to better manage payments and new investments.

5.Car and Truck Loan

What Is It?

This type of loan is typically offered to self-employed individuals, trusts, partnership firms, organizations who are involved in the transportation business and are considering purchasing vehicles for commercial or business purposes. This will cover the purchase of trucks, cars, buses, and light and small commercial vehicles.

Why Get a Car and Truck Loan?

Since vehicles are depreciating assets, it is common for businesses to opt for leasing. But if you are looking to use the vehicle for a long time and want to write off the depreciation on your tax return, it might be better to get a loan and purchase the vehicle.

6.SMSF Loan

What Is It?

SMSF, short for self-managed super fund, is a type of loan by a self-managed super fund (SMSF) to buy investment property. Regardless of whether the returns on the are via rental income or capital gains, these will have to be funneled back into the super fund.

Why Get a Self-Managed Super Fund Loan?

Thanks to gearing, the SMSF loan allows you to purchase property worth beyond its own available funds. Even if a loan defaults, the other SMSF assets will be protected since the lender may not have recourse to the other assets in the SMSF. To top it all off, SMSF enjoys all capital growth and income even while the property has not been fully paid for.

7.Short-Term Finance

What Is It?

Short-term finance, also referred to as working capital financing, is usually availed by companies that are experiencing an uneven flow of cash. Businesses generally use this type of commercial loan to finance inventory, accounts receivables, etc.

Why Get Short-Term Finance?

The repayment period typically last a year and is, therefore, appropriate for businesses that are cyclical in nature.

Many times, we’ve been in a financial situation where we need money to start or complete a project. That’s why we get the help of loaning an amount from either the bank or some other financial institution. Many people who are confused about what is a loan, well it is a lump sum of money that you borrow with the expectation of paying it back either all at once or over time, usually with interest and they are a fixed amount, like $5,000 or $15,000. The interest rate varies from the amount of money you are taking from the bank. There are some factors that they do consider before loaning you an amount these are your income, debt, credit history, and a few other factors. Some loans are the most common because the amount is higher, and the interest rate is lower; such investments are home loans and student loans. It is important to know that there are different types of loans you can borrow and we are going to talk about that today in details.

What are Open-ended and Closed-ended Loans?

These are loans that you can borrow over and over. The credit cards and lines of credit are the most used types of open-ended loans, these have a credit limit, which is the maximum amount you can borrow at one time. Depending on your needs, you can use all or part of the credit limit. It is normal that the more purchase you make, the quicker the credit decreases. As for closed-ended loans, these are the one-time loan that cannot be borrowed again once they’re repaid. As soon as you make a payment on the closed-ended loans, the balance goes down. If you don’t have any credit, then you can use the closed-ended loans, but if you need more money, then you would have to apply for another loan and go through the same approval process all over again. The common types of closed-ended loans are mortgages, auto and student loans.

What are Secured and Unsecured Loans?

These are loans that rely on an asset as collateral for the loan, and in the event of the loan default, the borrower can take possession of the asset and use it to cover the loan. Know that the interest rates for secured loans may be lower than the unsecured loans. However, it is good to know that the asset may need an appraisal in order to confirm its value before you can borrow the amount that is up to the value of the asset. An example of a secured loan is a title loan. As for unsecured loans, these do not require an asset for collateral. Unsecured loans depend fully on your credit history and your income so that you can be qualified for the loan. If you don’t pay an unsecured loan, then the lender can exhaust the collection options that include a debt collector or a lawsuit to recover the amount.

5 Types of Loans

Here are the five most common types of loans apart from home and student:

  • Auto loans – These are mostly used so that you can buy a new or used car and it normally takes years to pay off. An auto loan can be financed through a bank, credit union or a car dealership and these have the lowest interest rate.
  • Personal loans – These are types of unsecured loans and are mostly offered by the bank. It is normally based on the borrower’s creditworthiness and high scored are preferred. The money from a personal loan can be used to pay off any bills or debts. Interest rates for personal loans vary from 9% to 12 % depending on certain financial institutions.
  • Credit cards – These are essentially loans that the borrower and the bank agree to be repaid at a later date. It is one of the easiest loans to use.
  • Cash advances – Known as short-term loans that are offered by credit card companies. Short-term lenders are payday lenders and tax-preparation companies. These offer money against an expected refund.
  • Small business loans – These are banks that offer small businesses to start their business by providing a loan that would have variable rates and the payment can be made from five to 25 years.

Loans to Avoid

There are certain types of loans that one should avoid taking even if in dire need of it! They are like predators and take advantage of the consumers. These are:

  • Payday loans are short-term loans that are borrowed using your next paycheck as a guarantee for the loan. These loans interest rates are pretty much high, especially when it comes to annual percentage rates, and it can be difficult to pay off.
  • Advance-fee loans are scams to trick you into paying money. These use different tactics to convince borrowers to send money to obtain the loan, but the lender will have to pay an upfront fee to obtain the loan. There is a risk in this type of loan and is normally avoided by anyone.

If you’re looking for a reliable source where you can manage your finances, then do consider FLAME Mortgages. They are your experts in finance loan and mortgage. As a family-owned and operated business, they do know the real problems when it comes to mortgaging and financial crisis. The management assists you from scratch in order to get a better understanding of your needs and financial goals.

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