KNOW THE FACT ABOUT BAD CREDIT AND BUSINESS LOANS

Before setting up a business, there are two questions that you must ponder: Are you willing to finance your own business from your personal assets? or Is applying for a business credit a more practical approach? If you choose the latter, it is important to review your credit history.

Having a bad credit must not hinder you from setting up your own business though it cannot be avoided for the credit history to be reviewed whenever applying for a loan. This review would play a role in determining whether your application for a business loan would be accepted or rejected.

A good credit history can help you qualify to a loan with great rates, terms and conditions. On the other hand, if you have a bad credit history, you do not have any choice but to settle for a bad credit loan. A bad credit loan is designed to help people who have bad credit history. Unfortunately, not every lender offers these kinds of loans. Do not take that as an obstacle that you cannot overcome but it must motivate you to look for lenders who are willing to offer bad credit loans.

Terms for a Bad Credit Loan

It is natural for the lender to charge a higher rate of interest for people with bad credit history, since these people are considered to be a risk factor in lending a loan. You must be prepared for the higher cost of closing costs, processing fees and others as compared to a normal loan. However, you will be assured that your application will be accepted even if you have a bad credit score; this is a definite advantage despite the high rate of interest.

If you review and compare the loans, almost all of them are similar to substandard ones but you must understand the reality that because of your bad credit score, these loans are the only chance you have. There is no other lender who would accept your application.

Improving the Chances

You have the option of applying for a secured loan to help improve the chances of the application to be accepted. In a secured loan, the borrower is required to pledge a type of security when he or she applies for a loan. By doing so, the lenders would not be at risk. In the event that the borrower defaults on the payments, the lender can easily retrieve the amount. There are several lenders who are more open to the subject of a secured loan and it might not pose a difficulty for you to convince a lender in spite of your bad credit rating.

You can also hugely improve the chances of your application to be accepted by building credit worthiness before applying for a loan. You can do this by never defaulting on payments, keeping your banking transactions and others free of errors. If have done all of this, then you can apply for a loan. This only shows that despite your bad credit history, the recent pattern in your transactions is developing healthy payment habits. Credit worthiness is the most important determining factor regarding the issue of the chances of your loan getting approved.

Payments

Once your loan has been accepted, the last thing you are required to do is to always make sure that you make your payments on time. Doing so would somehow clear your bad credit history and allow you to apply for proper loans and not on bad credit loans.

 

If you are looking for a finance adviser or a broker, please visit us.

 

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Home Mortgage Financing

Ideally, traditional mortgage lenders want new home buyers to have a 20% down payment when purchasing a new home. Thus, if purchasing a $200,000 home, you should be prepared to have $40,000 as a down payment.

Unfortunately, many people do not have this kind of money lying around. For this matter, Mortgage insurance (MI), known as Lenders Mortgage Insurance ( LMI) was created as a way for mortgage companies to recoup their money if a homeowner defaults on the loan. There are various loans available to assist people with down payments. In some instances, homeowners can obtain 100% financing, and avoid LMI.

What is LENDERS MORTGAGE INSURANCE?

Because Australians are earning less money, and home prices are steadily increasing, the majority of the population is unable to save the recommended down payment of 20%. In order to make owning a home possible, mortgage companies created a particular mortgage insurance, (LMI), for people with less than 20% to put down on a home. This insurance protects the lender if you default on the mortgage.

How to Avoid Paying Lenders Mortgage Insurance?

On average, LMI may increase your mortgage payment by $100 – sometimes less, sometimes more. However, there are ways to avoid paying this additional insurance. The obvious involves having at least 20% as a down payment. If this is not an option, homeowner may agree to a higher interest rate. Another tactic entails getting approved for 100% financing.

How Does 100% Mortgage Financing Work?

100% mortgage financing makes it possible to buy a home with no money down. Also referred to as a piggyback loan or 80/20 mortgage loan, 100% mortgage financing involves obtaining a first mortgage for 80% of the home cost, and a second mortgage, or home equity loan, for 20% of the home cost. Together, the first and second mortgage allows a home purchase with no money down, and no lender mortgage insurance.

A recent report from the International Monetary Fund (IMF) warns of world-wide economic downturn ­– but the Government and two leading property experts weigh in on what waits ahead for the Australian property market – and it seems we may not face the brunt as prices are expected to take a steady ride up.

Whilst widespread debt, trade wars and economic dips in parts of Europe are listed as major factors at play for the IMF diminishing economic growth forecasts, locally felt struggles in Australia have come about from the drought, housing market decline and credit crackdown.

However, the IMF report and national shadows have not shaken the Federal Government, encapsulated in a speech delivered by Treasurer Josh Frydenberg, which assured Aussies they will not bear the brunt.

“Our economic plan with its focus on growth, productivity, and aspiration and budget repair, takes on an even greater significance as we navigate the currents ahead,” the Treasurer said, also stressing that if the Australian economy was to continue in strength, confidence had to be returned to the housing market.

But where do such hopes leave the housing market amidst dropping property values and tightened lending laws? Despite growing concerns, industry experts say it’s going to be on the up.

‘After a tumultuous 12 months for Australia’s property markets, 2019 looks likely to be a year of greater stability,’ says Domain economist Trent Wiltshire in a recent report – in which he reveals the market will continue to experience a softened dip over the next six months, before gearing up again ‘into another moderate growth phase’.

‘Solid population growth, low unemployment and low interest rates will underpin Australian property price growth in the medium term. More restrictive lending conditions will continue to weigh on prices in the immediate future. But eventually, borrowers will begin to adjust to this new normal,’ the Domain economist says.

A norm that sees Aussies adjusting to, and better understanding how much they are entitled to borrow and the length of time it can take to get a loan, both of which Wiltshire believes will lead to an increase in borrowing  – also ‘at a modest pace’.

When broken down in Wiltshire’s report, combined Australian house prices, which sat at an estimated -6% in 2018, are predicted to climb to 1% this year, before reaching 4% in 2020.

Even more growth is expected to occur with unit prices across the country, forecast to climb from -3% to 2%, then 3% in 2020. Property prices have been on a decline since 2017, and although having snowballed, stricter lending laws should be accounted for but a fraction of the cause.

‘Falling sentiment has a reinforcing effect on prices: as prices fall, buyers become more hesitant, further pushing down prices … Another factor at play is that lots of new housing hit the market after a high rate of new construction in the previous couple of years,’ Wiltshire says.

He also invites us to reflect on the upcoming Federal election, which could harm property prices, especially if the Labor party is to be voted into power. Wiltshire expresses concern over the party reducing the capital gains tax discount from 50% to 25% if they pull through, likely to be enforced by 2020 – leading to fewer investors being inclined to put their capitals into the property playfield. A leading real estate CEO weighs in on similar sentiments.

“Uncertainty about changes in policy, such as Labor’s proposal to limit negative gearing tax breaks to new investments, and halve the capital gains tax, will cause an extended period of stagnation,” says CEO of Starr Partners Douglas Driscoll in his market forecast for the year ahead.

In referring to the Federal Government’s challenges to adhere to the banking royal commission’s recommendations as a “balancing act” – for Government still also needs to “ensure that people are able to easily access credit” –  Driscoll warns that careful attention needs to be paid to the banks for their potential to “low ball buyers on valuations”.

“Anyone who is struggling to secure lending should contest the valuation. It is possible to request a second opinion, or alternatively, provide extensive comparative evidence for similar properties that have sold in the area,” he advises. Driscoll also delivers good news to property owners.

Those paying down mortgages should take advantage of Australia’s record low interest rates, which Driscoll says will continue to remain low into the first part of this year, and thus be of advantage to mortgage holders in the long run especially if they are willing to dig into their disposable incomes.

“It is advisable that homeowners pay down as much debt as they can while we have this advantageous environment,” Driscoll says. “Paying an additional $150 a month on a $600,000 loan could save a homeowner more than $10,000.”

Auctions have never been an Aussie’s favourite thing to do on a weekend, and according to Driscoll, many will be “too embarrassed” to put their properties under the hammer, largely due to auction clearance rates sitting at around the 50% mark. But he has faith, reminding sellers they “need to trust the auction process and know that several properties also sell before and after the actual auction day”.

Getting a house of your own is a lifetime achievement and a home mortgage helps you in achieving this milestone much earlier than it would otherwise have been possible. In fact, the first home mortgage is also filled with a lot of emotion. A home mortgage is really something that makes dreams come true.

So let us start with understanding what a home mortgage actually is?

A home mortgage is something that allows you to buy a house even if you do not have enough money to pay for it right away. This is made possible by borrowing money from someone and paying it back in monthly instalments. The person who lends you money is called the home mortgage lender. The home mortgage lender lends you money for a specific period (up to 30 years) during which you are expected to pay back the money in monthly instalments. There are certain terms and conditions associated with the home mortgage agreement and these terms and conditions govern the home mortgage throughout its tenure. Among others, the most important thing is the interest rate that the home mortgage lender charges you. Interest charges are the means through which the mortgage lenders earns on this financial transaction called home mortgage. Most home mortgage lenders offer various home mortgage schemes/options. The most important variation in these schemes is in terms of the interest rate and the calculations related to it. In fact, most home mortgage options are named after the type of interest rate used for that option. Broadly speaking, there are two types of home mortgage interest rates – FRM (fixed rate mortgage) and ARM (adjustable rate mortgage). For FRM, the interest rate is fixed for the entire tenure of the home mortgage loan. For ARM, as the name suggests the home mortgage rate changes or adjusts throughout the tenure of the home mortgage. This change or adjustment of mortgage rates is based on a pre-selected financial index like treasury security (and on the terms and conditions agreed between you and the mortgage lender). That is how mortgage works.

No matter what type of home mortgage you go for, you always need to pay back the entire home mortgage loan (with interest) to the mortgage lender. Failing to pay back the mortgage lender can result in foreclosure on your home and the mortgage lender can even auction it off to recover the remaining debt.

Therefore, home mortgage is a wonderful means of getting into your dream home much earlier in your life. Without this concept, you would have to wait for a long time for getting into that dream home. Really, a home mortgage is one of the best concepts from the world of finance.

If there is anything that can prove the impact of stricter lending rules by lenders in Australia, it would be the latest data on home-loan rejections.

According to Digital Finance Analytics (DFA), 40% of home-loan applications were rejected in December due to non-compliance with existing lending standards.

While this is a drop from the previous month’s 48% rejection rate, it is still significantly higher than last year’s 8%. It is important to note that the volume of applications across all segments leading up to the holiday season has decreased and that many households have filed multiple home-loan applications.

“The fall in investor applications is significant, as appetite for investment property eases. The relative volume of refinance applications remained quite high, as people are seeking to reduce their monthly repayments,” DFA principal Martin North said.

Compared to authorised deposit-taking institutions (ADIs), non-banks recorded lower rejection rates at 20%.

North expects the number of rejections to remain prominent this month as the number of loan applications continues to grow.

For investors, he suggested watching the availability of credit, as moderation of loan offerings could result in a price decline of up to 30%.

“As credit drives home prices higher, so the reduced availability of credit drives prices lower. Our own view is a fall of 20%-30% peak-to-trough over the next two to three years,” North said, adding that the fall could worsen if global uncertainties are factored in.

Finance can be the most important thing for anyone with dreams to fly in his eyes. Today our world runs on finance. The forms may be different but the purpose is the same, to cater to our needs. When we fail to cater our needs due to lack of enough funds within our resources, we look outside for them in form of loans. One such way of funding our desires is secured home loans.

A secured home loan is secured by your home as security. These loan are like any secured loan and can be used for any of you personal purpose. The advantages of such loans are following:

• Interest rate is low as the loan amount is secured.
• Repayment is spread over a longer periods resulting in smaller monthly payments.
• Flexible terms and conditions for loans.
• Higher rate of approval of loans ensure you that you will be getting the loan approved easily.
• Online option is there to choose and apply easily
• Reduced paper work
• Faster approval once your property is valued.
• Multipurpose loans (can be used for debt consolidation, medical expenses, education, buying a car, boat, vacation, home improvement etc)
• People with bad credit history can also apply.
• You can borrow up to 125% of your collateral value.

Secured home loans come in various flavors to choose from:

• Fixed loans – the interest rate will remain fixed under this for the whole repayment term.
• Variable loans – rate of interest will fluctuate according to interest rates in the market.
• Capped loans – a limit is set up to which your interest rate can rise with rise in interest rate in the market.

You can decide among these according to which rate suits you the best.

A secured home loan allows you to borrow amount ranging between $30,000 to $100,000 on the basis of equity in your home. Equity is the market value of your home less any debts taken against it.

Shopping for a right loan lender is one thing which every borrower must do before applying. There are lot many lenders in the market with different rates and terms.

It happens may time that you came to know about a low rate package after you have already applied for the loan. So to avoid this do proper research, visit lenders offices and study their quotes. Your hard work can help you find out the best secured loan out of the rest.

 

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A Quick Guide To Mortgage And Re Mortgage

Buying a dream home is one of the major milestones of any individual’s life. The price of real estate is increasing day by day. The designer and flashy homes, which appeal us the most, are beyond the financial capabilities of a lot of individuals. However, this fact should not deter us from fulfilling such a dream. With widely available low interest mortgages, now even a common man can own the residence of his choice.

Starting with the basics, mortgage is a type of loan that any individual can take, in order to buy a home or a property. The property being bought is used as collateral to the loan, this often means that if the repayments schedule of the mortgage is not complied with fully, the lender can take the possession of your property, and sell it to recover his amount.

Any mortgage deal whether it is the first one, or a remortgaging effort, requires a lot of hard work. The best advice given by any lender is cleverly disguised to suit his interest the most. So, the first thing that any borrower should do is to take a closer look at any lender’s advice and compare it with other offers floating in the market.

Choosing the mortgage that is right for you and getting the best deal, involves taking a lot of decisions. The two main things that require the greatest attention are the interest rates charged for the mortgage and the repayment method of the mortgage.

The rate of interest to be paid for mortgages are determined by the base rates prevailing in the loan market. A borrower should go for a low interest mortgage, since the lower the interest rate; the lower will be the monthly repayment. At any given point of time the borrower might get hundreds of offer for mortgage. Each lender has different conditions and charges.  The borrower is advised not to succumb to any offer with cheap initial interest rates; instead he or she should look at all the features of mortgage before accepting any deal.

As for the repayment method the borrower has two options – a repayment mortgage or an interest only mortgage. In a repayment mortgage, the borrower has to pay off the amount in equally spaced instalments. The instalments gradually recover the principal amount coupled with the interest from the borrower. Thus, the mortgage is fully paid by the end of agreed term.

In an interest only mortgage only the interest is charged in the instalments. The principal amount is not included in the monthly repayments. The arrangement to repay the principal amount is made by other means, usually at the end of the mortgage term or as agreed between the two parties. The mortgage amount is guaranteed by some investment in shares, or stock. The borrower has to make sure that his investment grows, so as to pay the mortgage by the end of agreed term.

Most lenders will offer mortgage up to 95% of the property’s value under consideration, but the borrower might have to pay a higher lending charge if he borrows more than 75% of his property value. There are other costs also, which are essentially involved with a mortgage. The lender might ask you to deposit an amount up to 3-10% of the asking price of the property. Valuation fees, solicitor’s fees and higher lending charges also escalate the price of mortgage.

After deciding on a mortgage, the borrower has to apply formally to the lender. He should take care to fill in all the details carefully. If he feels confused at any stage he should take the help of a financial adviser, instead of making wrong assumptions.  If everything goes smoothly the borrower will soon receive a mortgage offer.

Remortgaging means that we are taking a new mortgage to repay an existing one.

As time passes, the appreciation in property rates raises the home equity available at the disposal of the homeowner. Remortgaging utilises this increase in property valuation to get a better deal on debt, or some extra money. Remortgaging does not involve selling or changing homes, but the debt may be transferred from one lender to another.

There are instances, when we require funds for some new construction, such as an extra bathroom, new kitchen, additional bedroom etc. Many times we find that some of our existing borrowings, charge higher rates of interest than those charged by our mortgage lender.  In such cases, we can use the additional home equity available with us to provide funds and ease the repayment burden by remortgaging.

Australia, in recent times has seen a sharp decline in mortgage rates. Therefore, more and more homeowners having existing mortgages are applying for a remortgage to take advantages of the lower rates. Remortgage has become an easy process due to the increasing use of information technology in the lending process. People can now apply online for a remortgage right from the comfort of their home or office.  This has significantly reduced the time and effort for getting a property remortgaged.

Considering the reduced interest rates and easier repayment options, the homeowners often see remortgaging as good source for generating capital. Changing high interest debts into low interest remortgage with easy repayment terms is often, quite lucrative for the debtors. By changing their debt type they can significantly reduce the repayment burden.

There are many lenders in the Australian market, which provide competitive remortgage offers. Since, remortgages are used to move debts; it should be seriously considered that the cost of moving debts should not offset the savings in any such process.

The redemption fees, is the biggest cost to be incurred while taking a remortgage. A redemption fee is what a person has to pay when he ends an existing mortgage contract and applies for a remortgage. There are early redemption penalties, which escalate the overall costs of remortgage. These penalties are the largest when the debt is still new. Generally, remortgaging is not advised when such penalties are very high, but if you have a particularly good offer, which offsets the loss due to the early redemption penalty, you should consider it.

In addition to the redemption fee, there are many other costs involved with remortgaging. Some of which are discussed below:

  • The new lender who will provide the debt will like to reassess the value of your property to make sure that it is not a risky deal for him. So, he might charge some valuation fees for this process.
  • The entire remortgaging process has a legal angle attached to it. This might involve legal consultation fees. In addition to these, the lender might include the conveyance and other office charges.

The debtor should consider these fees while remortgaging. Options are available, where the lender might refund all or a part of the valuation, legal and office charges to the debtors, if the repayment schedule is exceptional. Be sure to ask your lender about such an option.

Remortgaging does provide funds with low interest and easy repayment options, but there are many drawbacks associated with it.

The debt repayment process again starts from the scratch. Short term savings might lead to a long term financial liability. The interests although relatively lower now must be paid over a longer period of time, and again the fact to be kept in mind is that any serious default in payments might lead to repossession.

 

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ASIC Warns Consumers Of Banking Scam

The Australian Securities and Investments Commission (ASIC) has recently warned the public about scammers claiming to be from ASIC.

The announcement was made in connection with the recent activities of Luxembourg Offshore Banking, also known as LUXOSB.  These scammers assert that withdrawals are being processed or withheld by ASIC. Luxembourg Offshore Banking and LUXOSB Limited also claim to offer an investment program called ExpertKonek, through an online trading platform relating to stocks, foreign exchange, cryptocurrencies and indices markets. In reality, neither of these brands are licensed or authorised in Australia to provide financial services. They are also not regulated by ASIC.

According to ASIC, customers are asked to provide proof of ID such as photocopies of a passport and proof of address such as a utility bill, to activate a personal “trading account.” ASIC urges anyone who receives unexpected contact from these entities to simply hang up or delete the email and block the sender. Consumers should contact their bank or financial institution if they have been targeted by the scam or if their bank account has been compromised.

“These are sophisticated scams convincing people to part with their money and provide personal information. The public [needs] to be extremely cautious of these scams and contact their financial institution if they believe their money may be at risk,” said ASIC Commissioner Sean Hughes.

Luxembourg Offshore Banking and LUXOSB Limited are based overseas despite claiming that they are associated with a company in Australia.

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Identity Thief and Your Credit History

You should know that identity theft has become worse with the major problem of shopping online.  There are sammers that are setting up clone web sites like the ones that are very popular to make purchases so that they can fool you to enter your personal information.  You can also have your personal information stolen by not disposing of bank statements and other pieces of mail properly.

Any woman that knows that it is very scary to have your purse stolen. This is going to cause a dreaded nightmare. You will end up losing your money and all of the things that are in it.  You will have to get all of your personal information cards cancelled or replaced. You will have to have your debit account closed or changed.  You do not want your bank account to be completely emptied by someone that has your debit card number.  If you do not freeze your accounts and stop this from happening you will be broke. The other important things that you will need to do are to file a report with the police and place an initial fraud report on your credit report.

You will be taking a chance anytime that you give your personal information on the phone or Internet. Before you enter your personal information like your credit card number to make a purchase, make sure that you check the web address to be sure that you are on the companies official web site instead of a fake clone with the same appearance but with a very wrong address.

The right thing to do if you feel that you are a victim of identity fraud is to get an very accurate credit report and look for the activity that you are sure of that is not yours.  In the event that you do find a new account is open or activity is not anything that you did contact the companies and try to get the signatures that was made by the thief.  The faster that you do this means that you will find it easier to keep your credit report safe and unharmed.

 

https://www.news.com.au/national/nsw-act/woman-caught-following-driver-stealing-parcels/news-story/ac65471d9cff54924f07b5a3ac485e01

Unsecured Business Credit And How It Can Help Cash Flow Problems

Unsecured Business Credit and How it can Help Cash Flow Problems

 

At some point in time, the reality with most businesses is that fluctuation periods would eventually come and such companies will have to face problems regarding their cash flow. A company may experience a financial crisis wherein more cash may be going out than entering as profit.

 

It is very important for any enterprise to never run out of funds, especially if the life of the business is dependent on being able to make large purchases of goods for production

 

What Is An Unsecured Business Line of Credit and How Does It Help?

 

An unsecured credit line for your business is a type of financing resource that can provide your company with the money that it needs without requiring collateral. This can provide you with the temporary funds that your company may need for operations to continue.

 

This is extremely vital especially when funds are simply either lacking or not available but your business is greatly dependent on making purchases for production and profit to come in. Aside from that, this type of credit line can also be beneficial for commercial use in such a way that it involves fewer risks for your part as the business owner as no collateral is involved.

 

Most lenders offering this credit line can also charge less interest and even a bigger credit limit as compared to other sources of finance.

 

What you should know about trying to secure such a credit line is that it may not be as easy as you want it to be or that it may not come right at an instant. In applying for unsecured credit lines, lenders would usually take the extra step of checking on your company’s credit history. This is necessary for them to do, as they are risking more by providing you with finances without the collateral.

 

And, thus, before you can be approved for an unsecured line, make sure that your company has maintained a favorable credit score. These lenders are interested to find out if whether your company is capable of making the right payments and purchases for both your parties to gain good income.

 

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