Category Archives: Finance

8 Conditions Which Can Result Into a Loan Rejection

download (8)Getting a loan may change someone’s life. But if an application is rejected, the dreams are shattered. And a single rejection leads to problems in the future. Though everyone fears a rejection on a loan application, only a few know the conditions due to which an application is rejected.

Bad Credit Score

Credit Information Bureau of India Limited (CIBIL) shares the credit details of an individual with all the financiers. These details include information on a borrower’s present and previous loan transactions. Banks provide all the credit information on all the borrowers to the CIBIL. Using this information CIBIL creates the CIBIL TransUnion Score and the CIBIL Score. CIBIL awards score based on the assessment of the information provided by the banks. The scores are given in the range of 300 and 900. Banks call for a CIBIL report as soon as a person applies for a loan.

Previous Defaults

Banks draw their own list of defaulters and this information is available to all their branches. This information is looked into when a person applies for a loan. This information is used in addition to the CIBIL Score and the credit report provided by the CIBIL.

Loan Guarantor

Sometimes people become a guarantor for the family members or friends. And if someone is a guarantor in case of a default then this poses a problem. The CIBIL report will show the person as a defaulter for the loan, even though the person was only a guarantor. Some will feel that this is not fair but that is how the system is. So one should be very sure while giving his/her name as a guarantor.

Too Many Loans

While lending money to an applicant the banks will add all the existing outstanding loans from all the banks or NBFCs. This helps in determining the amount an applicant is eligible for. Then the ratio of loan to income is calculated by the bank before extending a loan. The total monthly deductions should not exceed 50 per cent to 70 per cent of the take-home or gross salary.

Job Stability

An applicant’s job is an important factor too while lending the money. If the person changes job very frequently and the location too, it might be a negative point when applying for a loan. A stable employment record is very favorable when applying for a loan. The banks will have a positive outlook for people with a stable track record. The loan is given based on a good employment track record This gives the idea of stability in one’s life to the bank.

Tax Record

Banks make a thorough assessment of a tax profile by asking for the ITR copies of previous years including tax deducted at source/professional tax paid against the salary in the past. Not providing such information may lead to problems. So it is always best to obtain the income /Form 16-16 (A)/ certificate/TDS certificate from the employer.

Loan Rejections

If an applicant has been rejected in the past, the chances are high to be rejected again. So, one should be really sure while applying for a loan. It is better to check the CIBIL Score before applying. This gives a good idea of one’s probability to get a loan. Only apply when you are sure to get the loan.

RBI Defaulters/Willful Defaulters Lists

The Reserve Bank of India, RBI maintains a list of the defaulters. This list is updated by asking the bank to provide it to the RBI. The willful defaulters’ list is uploaded on the RBI’s website. The willful defaulters’ is the list of people who deliberately attempt to mislead the lenders in spite of adequate net worth.

 

How a Guarantor Home Loan Can Help You Enter the Property Market

download (7)Struggling to save enough to buy a property? You may want to ask your family if they can provide a helping hand in the form of a family guarantee loan. This is when the equity in a family member’s home is used as security on your loan.

Also known as a family pledge or guarantor home loan, it is a type of mortgage that allows you to borrow more money and provide less of a deposit. Usually when a loan is more than 80% of the purchase price (80% LVR) you will have to pay lenders mortgage insurance, but a family guarantee means you won’t have this extra expense.

It’s even possible to avoid paying any deposit because the equity in your family’s home can act as a deposit. This ‘guarantee’ makes it possible for you to borrow the full 100% cost of the home, plus stamp duty and legal fees. Lenders mortgage insurance will still be payable if you borrow over 80% of a property’s value.

There are many issues to consider when taking out family guarantees and it pays to keep in mind that loan terms and conditions can vary between lenders. Not all lenders even offer these type of loans, so give us a call and we can advise you which lenders would best suit your situation.

Here are some of the common questions we get asked about guarantor home loans. For more detailed information about any of the following, don’t hesitate to get in contact.

Does the entire loan have to be guaranteed?
No, the loan can be split, enabling the equity in your family’s property to be used as security for a small portion of the loan, for example 20%. The lender will take a mortgage out over the guarantor’s property to this specified amount.

Who can act as guarantors?
Guarantors are usually parents, but some lenders under certain conditions will accept grandparents, siblings, a de facto partner or a former spouse. To be approved by a lender they must provide enough equity to cover the amount being guaranteed and in most cases do not need to show proof of income. Normal lending criteria will apply in all circumstances.

What are the risks of a guarantor home loan?
There are risks involved, which is why it is important for the guarantor to know what they are getting into. Some lenders even require legal advice is sought to ensure the guarantor understands that if there is a default on repayments, they will be the ones held liable.

 

Situations When Hard Money Loans Are Utilized

download (6)Owners of commercial properties have capital needs for varied purposes such as purchase and renovations. In a perfect world the owners of the property would seek out conventional lenders such as banks and credit unions since they would most likely offer the lowest cost of money. Sometimes traditional financing is not available to the borrower or perhaps the borrower does not want to tie up personal funds to finance the project at hand.

In today’s more complex borrowing world traditional lenders cannot fulfill all of the needs of commercial borrowers. Often these borrowers look to Private Lenders to move their projects along. On the surface one may question why a borrower would be willing to pay much higher interest rates to Private Lenders (Hard Money Lenders) and may instead elect not to pursue their project until traditional financing could be found.

Hard Money Loans are typically short in duration and come with higher interest rates and fees when compared to traditional financing. For borrowers the analysis is about their end goal and the planned realization of profit from the completion of the project. Hard Money Loans play an increasingly important part in the commercial real estate world. Here are some instances where Hard Money Loans may make sense for borrowers.

Capital Improvements

If a capital improvement, repairs, or renovations are needed to the property which if completed would enhance the value of the property from both a valuation and/or rental income standpoint – a borrower may look to the shorter duration – higher interest loans as a wise move to achieve the enhancements to their properties. Often in these situation once the work is complete and the increased value and/or rental income is realized the borrowers can look for more traditional financing and pay off the Hard Money Lender and replace the loan with lower cost financing. Or they may look to sell the property and take the profit and move onto their next project.

Development

If a borrower is the owner of a piece of raw land and wishes to proceed with a “ground-up” development – Hard Money Loans may be a source of financing that they cannot find in the traditional marketplace. Lenders will look at a host of variables when assessing the credit worthiness of the project including the borrower’s development experience, collateral, timeline, borrower’s equity in the project, project presentation, and the financial reserves of the borrower. Weakness in one or a combination of these factors may cause a traditional lender to decline the project financing.

Hard Money Lenders will consider the same factors but often weigh them different in making their final determination. Conventional lenders will often put caps on the construction loans that they make as a percentage of the total development costs. In contrast, Hard Money Lenders may lend up to 100% (or more) of the construction costs if the analysis of the project warrants such. In other words – where conventional lenders are limited in the scope of the loans they are willing to make – Hard Money Lenders with experience in development may weigh the attractiveness of the overall project in their determination and ultimate decision.

Purchase of a Property

When borrowers are interested in purchasing a property often the timing of the purchase is critical. Hard Money Lenders service this market and provide an effective tool in the purchase process. Attractive real estate opportunities and strategic property purchases are often time sensitive. Traditional lenders are typically not able to provide financing quickly and thereby are often not a good alternative in these types of real estate deals. Hard Money Lenders are nimbler and able to evaluate, approve, and close loans quicker than traditional lenders.

Undervalue/Underperforming Properties

Undervalued properties or properties that are performing below market efficiency are good candidates for Hard Money Lenders. Traditional Lenders shy away from these loans due to the underwriting guidelines related to income statements and current expenses. In contrast Hard Money Lenders focus primarily on the value of the underlying property. With a properly constructed loan a real estate investor can obtain the required financing to provide time to improve the property, fill vacancies, increase rental income, and get expenses in line. Once the property is stabilized the investor can seek traditional financing to lower interest costs going forward.

Loan Underwriting

It is understood the credit worthiness of the borrower is a primary focus in the underwriting of a traditional real estate loan. Conventional lenders are also restricted by regulatory guidelines which limit how creative they can be in the loan approval process. Factors such as late payments, tax liens, mechanic liens, bankruptcies, foreclosures, and high debt levels all play a part in the underwriting of a loan.

Hard Money Lenders set their own standards concerning the level of risk they are willing to accept. These lenders can establish asset based loans whereby the cornerstone of the loan is the property itself.

Current restrictions in the traditional financing marketplace for those real estate investors that own more than 10 single family rental residences make it difficult to borrower additional funds. Hard Money Lenders are not as concerned about the number of properties that an investor owns rather they analyze the property itself and its attractiveness as an investment.

In closing, Hard Money Lenders can be looked at negatively because they charge higher interest rates to their borrowers. However, Hard Money plays a necessary role in the real estate investment marketplace as they fill a need that is created by the lack of traditional financing sources. Often the higher costs of the loan is well worth the purpose it serves. This provides investors the opportunity to participate in these loans and earn attractive yields with the security of a first position lien status.

 

Hacking Loan Interest Rates

download (4)Tragedy strikes and suddenly you need to help pay the bills for a loved one. Your soon to be pride and joy became triplets and the one bedroom you prepared just isn’t big enough. Life can throw some curveballs your way and the last thing you want is another surprise when you show up at the bank. With a little bit of planning you can keep the loan interest rates down and get back to more important matters.

Loan Rate Basics

Let’s cover the elephant in the room first. You already know your credit score is the single most important factor in deciding the loan interest rates offered. What you may not know is the lower your score the harder it will be to secure a decent loan and the higher the annual percentage rates will rise. It’s important to look in the mirror and know where you stand before you start applying for these loans. Every time you apply for a loan a new mark is added to your credit score and too many of these will make lenders uncomfortable. It’s important to go in with a game plan and stick your landing the first time.

Secured Loans

With your credit history in mind you’re ready to decide what type of loan to apply for. Almost every loan out there falls into one of two categories either secured or unsecured. Secured loans require a valuable possession such as your car or house to be put up as collateral and if you default on the loan the bank has a right to sell the possession to make up for their losses. These loans are considered lower risk so they tend to have better loan interest rates and generally have lower credit score requirements. Some of the most common secured loans you may already be familiar with are vehicle loans or home equities.

Unsecured Loans

The other popular loan type is unsecured, they are occasionally called personal or signature loans because all they require from you is to sign on the dotted line. No collateral is required for these and as a result if you were unable to pay it back there is little chance the bank can recoup its loss. With great risk comes great rates; these loans have some of the highest rates and require a much higher credit score to attain. It’s a common wives tale that unsecured loans are only for those with a high net worth. While that is a myth it is true that these are harder to attain and are much more expensive.

One Last Factor: Loan Term

The term is another important factor that determines the loan interest rates you’ll be offered. Banks consider longer term loans to be riskier so they increase the rate accordingly. If you’re pocketbook can afford it a shorter term might mean a lower rate and peace of mind sooner when the loan is paid off.

There are a lot of factors that a lender will look into to determine the risk but the three to keep in mind are your credit history, the type of loan and the term. With a little bit of forethought you can be an informed consumer and keep the loan interest rates down to a minimum when life comes knocking.

 

A Guide To Loans That Are Unconventional, But Are Equally Important

download (5)Today, you will find a range of bank loans and finances to choose from. However, there are a couple of loans that are yet to be heard of, but are important and can lend immense value to your overall portfolio. So now is the time to read about such exotic loan types that are not so much popular; but when it comes to significance, their importance is undeniable.

Portfolio loans

Portfolio loans are actually designed to get the loan applications of borrowers approved whenever they fail to complete the eligibility criteria for any other, more normal financing product. Such mortgage loans are largely funded by credit unions, small-sized banks, and other mid-sized commercial mortgage lenders. The reason why this loan type is found in credit unions and local banks is because they are way more home grown than any of the common mega lenders. Further, these lenders want to play a part in writing the growth story of their local economy. Now, let us read up on the factors why such loan types can be considered while you purchase your next residential or commercial real estate.

Why portfolio loans must be included in your investment portfolio?

The key reason why a portfolio loan must be opted is whenever you face recent credit issues. Many a time, a portfolio loan is opted whenever borrowers have wrecked their respective credit histories; perhaps their credit was destroyed because of either a nasty divorce or a business deal gone bad. This will, indeed, have a massive impact on the borrower’s capacity to earn for at least the next 12 months. And many times, this phenomenon forces foreclosure or possibly bankruptcy. So, in short, this loan type is needed whenever the borrower is going through a rough patch.

Blanket loans

Put simply, a blanket loan is a type of mortgage financing that will make the transactional phase becomes easier and quicker. Here, just a single mortgage will cover or secure more than a single parcel of property. They are, by and large, commonly used by commercial land developers and investors; however, in a couple of cases, they may even be used for residential transactions-in this case, the loan will act as a bridge between the new and the old mortgage.

Why should you opt for a blanket loan?

Blanket loans will easily eliminate any need for refinancing whenever the old home is sold. During such a period, whenever the portion that covers the old home is paid, the blanket loan will simply become a standardized mortgage that covers the new home or homes.

Cross-collateral loans

A cross-collateral mortgage is a loan that will use multiple (or at least two) properties as the collateral before the amount is lent to the borrower. This mortgage will be cross-collateralized against a range of properties and will provide additional security, which, finally, compels lenders to offer the loan. By and large, this loan form is offered by private banks as well as portfolio lenders.

Why cross-collateral loans are preferred?

There are two key benefits: The first one is that this loan is beneficial for lenders as they will get additional security. The second benefit is for the lender; now, as the lender brings an additional value (in the form of multiple properties) to the table, the borrower will have a lower LTV – and a lower LTV implies a lower price charged on the loan.

So here are the top three of the most unconventional residential and commercial real estate financing options that must be chosen by investors who want to bring diversity into their portfolios.

 

Borrow or Lend Money Online, Without a Fuss

download (3)How the older generation wishes that online desktop facilities were available during the previous decades! Technology has truly opened up a million windows of opportunity besides making work so much simpler. Applying for loans can now be completed within minutes and, once approved, the money is deposited in your bank account immediately. As easy as that. Of course, the uploaded documents should be in order and the lending organisation must be convinced. Otherwise, we often find exploitation and manipulation where loans are concerned. The interest you pay may be as little as 11%.

Become a part of the peer to peer lending/p2p lending online culture for personal or business loans. If your requirements range between Rs.10,000 and Rs. 25 lakhs for a period of 3 months and 10 years, facilities exist. Business loans could extend up to Rs. 60 lakhs. That sounds serious enough, but think hard before you decide. Money matters are tricky and you need to carefully study your circumstances in terms of timely repayment.

The entity like a mediator brings together lenders and borrowers on a common platform. The potential borrower’s documents are scrutinised by the lender who makes a decision and provides the money. You need not traverse the town in search of lenders and thus avoid some unscrupulous persons like the pawnbrokers who often charge exorbitant rates of interest.

Don’t you think it is a viable option? Almost all of us need a loan at some point in time.

Salaried persons need have no worry about repayment of loans because of their regular income. Why do we need loans? Whether it is money you need for buying land or a house, purchase of a vehicle, education for children or marriage, a fair system is worked out that would be quite acceptable to the borrower. You fill out the form online, whether for short or long-term loans.

If you are not used to the present online systems, you get to meet nobody personally during the process since everything is automated through software. Imagine completing the educational courses online with no face-to-face meeting.

The borrower-lender facilitating organisation solves many financial problems seamlessly online for those who need loans without a fuss. Get your documents ready like the PAN card and Aadhar card along with address proof besides electricity bills that may be required for submission online, scanned copies of course. The lender would study your credit score. If documentation is clear, loan sanctions are quick.

The website has a list of FAQs to clear up whatever queries and doubts the borrower or lender may have. You need to hold a bank account of course for transactions besides being an Indian national. Most convenient peer to peer lending indeed usually approved within 24 hours.

The author of this p2p lending article worked in financial institutions for three decades and is associated with several banks as a consultant. He realizes the need for loans for various reasons and Working Capital and encourages the taking of loans on fair terms.

Should You Get a Home Renovation Loan

download (2)There is no question to the popularity of home renovations and home remodeling these days. Somehow, people are beginning to realize that they do not have to suffer living on a house they do not like. They do not have to go to a small bathroom, disorganized kitchen and small living rooms. They no longer have to feel ashamed of inviting friends over. Renovations allow them to improve their home life without having to move to a new home.

Some people want it right away

Probably because of their discomfort while living in a home that they don’t like, they would want to renovate as soon as possible. They either use their savings or loan money from banks just to have their desires granted. But should a person get a loan for renovation or should they save money until they have enough?

Urgent and not urgent renovation

Some renovations are needed immediately. For example if your heating system is not making enough heat and winter is coming. Naturally, you want to get a renovation company to modernize your plumbing and make your home more efficient in keeping heat inside during winter. You should loan for that renovation.

On the other hand, if you simply want to make your home more beautiful or look more modern, then you should save money for the renovation because these are not urgent and they don’t require immediate attention.

Note that “urgency” is an ambiguous term as it can mean different things for different people. For example, a person who is always stressed out may consider renovating his house as urgent because he only feels more stressed when he comes home after work. Meanwhile, for others who are not as stressed as the person from the previous example may not consider renovation an urgent issue. It all depends on the person because everyone experiences the world in different ways.

Disadvantage of loaning

Loaning for a home renovation is okay when the renovation is really needed and if there is no other option. However, loan will make the renovation more expensive than it should be because now you have to pay for the interest of your loan.

Advantage of loaning

By loaning, you can push through with your renovation project even if you don’t have enough funds yet. This means you can renovate your home to accommodate your family’s growing needs or boost your home’s value if you want to sell it soon, without breaking your budget.

 

Top Advantages of Unsecured Business Funding

downloadWhat is an unsecured business loan in the first place and how does it differ from the conventional loan? In short, collateral isn’t necessary with an unsecured loan, but rather a bond of trust. The funding organization will provide the business with the capital it needs based on the understanding that the business will be successful enough to pay back the loan in time.

Excellent Credit isn’t needed

Because the business owner already owns a successful business, an excellent credit history isn’t necessary to obtain funding. Usually, the business has to only prove that it makes enough money to be financially responsible for repaying the loan in a timely matter. Their business stands as a testament to their successful character. Think of it as the financing company as an investor. If they see that the business is doing well, they will be happy to invest in it.

Payments based on percentages

In many cases, the borrower agrees to accept funding with the agreement that their business repays the capital with a certain amount of their gains every month. There’s usually no check writing or payment due dates. The percentage can be withdrawn directly from the sales of the business. The great thing about that is that the borrower never has to worry about missing a payment due to a lack of funds. If sales are slow during a certain month, the monthly payment is small in total. On the reverse, if the capital causes the business to be even more successful, that success will help the borrower automatically repay the loan with a rising percentage of the increasing profits it receives.

The money can be used anything

There is a multitude of reasons a business owner might need extra cash. Some may want to develop and expand their business.Technology advances every minute and keeping up to date can be important. If not the technology, it could be the locations. It’s not all the time that the perfect piece of commercial property comes available. A business would hate to miss out on their chance at taking the next step.

Others may use the money for putting their name out there with unique advertising techniques. Television commercials can be pretty expensive from creating one to paying for the TV slot. Sometimes a business might just be hiring new employees to utilize the capital for funding their payroll. No matter what the reason, an unsecured loan has much more potential than a traditional one.

Faster and Easier

A traditional loan takes time. Waiting to hear back from the bank may take weeks, especially when asking for a large sum of money. Through unsecured methods, a business can typically receive funding in as little as 3 days. If they have the need for it, they could even get approved for as much as $500,000! That much money would be hard to get approved for at a normal bank. If the business did get approved at a bank, it would most likely take a long time and come with a heavy interest rate.

Any Industry

Because no collateral is needed, an unsecured loan can be used in any industry. The business doesn’t need to sign over his/her most valuable possessions just to get funding. There are no strings attached other than the usual requirement of making a certain minimum amount each month. As long as the business is successful, it won’t matter what the industry is.

These are only a few of the potential benefits that come with this hassle free business funding. There are plenty of more advantages depending on the specific business. For those with a stable looking to expand, unsecured funding could be the perfect choice for their business.

 

Comparing All the Top Two Wheeler Loan Interest Rates

imagesTraveling couldn’t be more hassling than it is today. With the increase in traffic, and also daily traveling population, people are looking forward to buying new modes of transport to mitigate the loss caused by delay due to traffic clogging and unforeseen transport conditions. Two-wheelers are easier and faster mode of conveyance that can move through traffic easily, due to the petite built, while saving time on travel.

Before purchasing, consumers tend to compare the various two wheeler loan interest rates to understand which options works best. The loan interest rates, as per current updates, stand at 18.25%, 16.50% floating rate. Given the necessities of life, both in cities and villages, it is imperative to have a convenient mode of transport in order to avoid delay in travel for both service and businessmen. Such a purchase is more on the need-basis than extravagance.

Consumers must always confer with a banker and discuss the current rates. Due to the availability of various financing options and multiple loan rates, it is imperative to come to a decision and choose the right option that suits the consumer requirement.

There are various advantages, features, and benefits when one applies for a two wheeler loan.

  • Banks offer up to 90% cover, with which a customer can purchase a brand new two-wheeler of his choice.
  • Since the interest rate for applying for a loan has gone down, it has become easier to apply.
  • Easy repay via EMIs extend up to 5-7 years.
  • Coverage of costing for accessories, registration, and insurances.
  • Easy and hassle-free documentation.
  • The flexibility of loan repayment.
  • People earning up to 50,000 a year are offered these loans too.

The two wheeler loan interest rates vary from 13%-27% depending on the bank. Since these interest rates are floating rates, they are mostly linked to the base rates that have been a constant. The interest rates also differ in terms of tenure and margin. These reasonable interest rates have enabled even meager-wage earners to buy a brand new two-wheeler. Applicants can choose a suitable tenure, by which time they can repay the loan, on the basis of monthly EMIs. With the help of the internet, people can apply for these loans online too. These loans can be processed in less than 24 hours and the documentations required are easy to produce.

Two wheeler loan interest rates allow consumers from every walk-of-life to apply for a loan and purchase a personal mode of conveyance at an affordable price. These are by far the most accepted kind of loans that people have applied for over the last 7 years.

 

Know The Art To Secure No-Income Verification Loans

download (1)Introduction to no-income commercial verification loans

The name says it all – a no-income verification mortgage is a loan type that you, the investor, can secure without verifying your income. A no-income verification loan is pretty simple to secure, and all you’d need is someone to assist you throughout the process.

Getting these no-income commercial verification loans is simple because there won’t be any verification or a mountain of paperwork required. Well, that’s neat as long as you’ve got a neat credit history. This option may be chiefly leveraged to develop a piece of commercial real estate for resale. Also, you may need this mortgage option to become an owner of commercial realty.

Plus, these loans are apt when you’ll need:

  • Equity takeout
  • A specific line of credit

Anyway, now let’s get to know how you’ll get the best no-income verification loan that’ll suit all your needs to a tee.

Your steps to get this specific loan type

Now as a self-employed person, you’ll have to depend on tips and commissions-and that makes loan approval a pain. However, the pain will be temporary if you know your way to getting this loan type. Here are the steps that define this loan-approval procedure.

Finding a good lender

Every lender offers this loan because of the involvement of high rate of interest. So it’ll be apt if you find out the extent to which your lender is willing to withstand risks. For this purpose, it’s better if you discuss your requirements clearly with a financial lender.

Credit rating is the key

To cut a long story short, your credit ratings have to be very good because then only the loan will get approved. A low credit score attracts a lot of fees and high interest rates; these two are used as a compensation for your low credit score. So here are the ways to improve your credit rating:

  • Closing inactive accounts
  • Requesting for a change of account-this account has to be the key reason behind your abysmal credit score.
  • Paying the bills of all the credit cards and getting rid of all the other debts

Get the docs that are necessary

Every lender of no-income verification loans needs a couple of documents. So for this purpose, it’ll be better if you can lay your hands on balance sheets and your tax returns. Many lenders, though, don’t need docs. (That basically depends on the way you’ve maintained your credit sheet.)

Get to know the required down payment

This specific loan type will require you to pay a hefty down payment-it can be close to 35 percent of the total loan value. So for this reason, we’ll urge you to assure yourself that you’ve got cash at the ready.

For this purpose, find a lending institution that’ll be your partner in success. Every leading no-income mortgage lender will have a wide network of lenders who’ll, further, provide you a range of options for refinancing or financing your no-income verification mortgages.