Equity Finance » Interest Payments

Understanding Basic Finance Terms

admin — Mon, 13 Sep 2010 06:19:33 +0000

If your like many, you don’t always understand what people are talking about when it comes to loans. Without understanding the basic terminology when it comes to loans you just aren’t setting yourself up right to make an educated decision when it comes to applying for a loan. There are hundreds of terms; Below are some of the most important:

Assets

Assets can be described as anything that holds value. Assets can be all types of things from cars to houses. Assets can be used in helping to build credit. For example if you are applying for a house loan, you might use your car as an asset, to show that if you default on a payment, that you have assets to fall back upon such as your car.

Capital

Capital can be a bit of tricky term as it can be used in several different situations to do with finances. Capital can be described as the assets that are available for use towards creating further assets; it can also apply to the cash in reserve, savings, property, or goods.

Debt

Debt is amount of money or something of value that is borrowed from a person referred to as a debtor. Usually a debt that is borrowed will carry some type of penalty along with the payback such as an interest, or service.

Debt Consolidation

Debt Consolidation is replacing multiple loans with a single loan that is normally secured on property. This can often reduce your (the borrowers) monthly outgoing interest payments by paying only one loan which is secured on the property sometimes over a longer term. Because the loan is secured, the interest rate will generally be considerably lower.

Equity

Equity is the difference between the value of a product (for example a house) and the amount that is owed on it.

Liabilities

Liabilities refers to the sum of all outstanding debts in which a company or individual owes to it’s debtors.

Principal

Principal is used to describe the amount of money that is borrowed without including any interest or additional fee’s.

Term

Term refers to the length of a debt agreement. For example if you were to take out a loan for a house over 10 years. 10 years would be the term.

Feel free to reprint this article as long as you keep the following caption and author biography in tact with all hyperlinks.

By: Ryan Fyfe

About the Author:

Ryan Fyfe is the owner and operator of Loans Area [http://www.loans-area.com]. Which is a great web directory and information center on Loans and related issues like Debt consolidation and Credit issues.

finance

The World of Finance and Mortgage Loans

admin — Thu, 09 Sep 2010 06:07:14 +0000

A big part of the economy of the modern world depends on transactions made by people at different times. These transactions can be for a commercial or even a personal purpose. You can make expenditures to buy a new home for your family or spend money to invest in your business.

However important each of the reasons for expenditure may be it may not always be a convenient time for you. People do not always possess large amounts of money to be spent accordingly no matter how important the reason is.

There are several ways that are available in the modern world that is offered as a solution to all your problems.

One of the ways that most people opt for in today’s world is to apply for an appropriate loan that suits their need of the hour. These loans are available with varying amounts of interest payments along with the principle amount at the end of the term period. But this is a convenient and safer option that is available to you at a critical hour.

It is vital that you weigh your options appropriately and choose the right type of financing that is available for your project.

Here are some of the options of finance and mortgage loans for your reference.

Commercial Mortgages

A commercial mortgage is a form of loan that is taken against an office or a business property that is used as collateral. These loans are mostly taken by business houses and commercial ventures that are run by partnership firms than an individual borrower.

Commercial loans are also available if a company wants to buy expensive machinery or make modern renovations for their offices.

Here are some of the criteria fulfillment clauses for your reference.

The bank or the finance company will check the cash flow finance of the enterprise. This is to ensure the source of income with which loan repayment will be made. The credit history and background of the borrower. Records of earlier loan payments or credit card transactions and payments are important. The nature of business and its current market position.

Bridging Loans

There are times when a person may be awaiting the approval of a full finance for a project from the bank. But there are some immediate expenses that have to be met by him as well to avoid heavy losses for the suture.

For example you are awaiting the approval of your home loan. But if you do not make a down payment within a certain date you will lose your chances of acquiring your chosen plot of land or apartment.

You can avail a bridge loan as an interim financial arrangement that is taken for a short period of time. The repayment time can range between 2 weeks to 3 years. They also entail a higher rate of interest.

Acquisition Finance

There are loan assistances available when there are mergers or acquisitions between companies as well. The need for the excess funding may arise from the need to improve the financial situation of the company or the pay off immediate debts.

This type of loans is also used to make stock purchases of a company by another company. Banks and finance companies check the credit history of the purchasing company along with their

Newer business policies of banks and finance companies have developed several loans schemes and procurement policies aimed at attracting people for a variety of reasons.

It is important that people understand their needs and make a proper choice.

By: Mathew Gaurce

About the Author:

For more information on bridging loans, check out the info available online; these will help you learn to find the commercial mortgages!

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Saving For Hard Times

admin — Wed, 11 Nov 2009 13:01:36 +0000

Saving for rough times is a crucial part of your financial planning as having some spare cash stashed in an easily accessible place to cover disasters is a good idea. At a certain point common sense dictates that you’re going to run into an unforeseen expense and not having funds to pay for it you’re going to have to use poor borrowing practices. The average surprise cost when such events do occur is thought to run a few thousand dollars however whether it’s a gigantic amount or a very minor amount a disaster fund is needed to cover it.

You don’t need to hide this money under the mattress for it to be available. The best way to conserve this fund is by using a quick access savings account that pays a good rate of interest and hopefully is tax exempt. You could set up a simple bank transfer and allot a small amount into your bank account each pay check. You should also be sure that your savings account is low risk as you wouldn’t want to lose the money by trying for high interest payments. For example: don’t invest the money in the stock market, as stocks and shares can change in value, depriving you of much needed money at a critical moment.

Treat any interest your disaster account earns as a perk and not the main reason for having the account. In a pinch you’ll need quick easy access to your money and this is more useful than a little more money in interest can ever bet. Do not allow your disaster fund to grow into a fortune as the extra money would be more wisely invested, growing more in a better investment vehicle. Keep just enough to cover a rainy day so a few thousand should be more than enough.

Don’t be tempted to use your existing account to create up your rainy day fund. Your existing account makes it easy to “borrow” from the savings without knowing it and this usually means you won’t have enough money when you really need it. Also most checking accounts don’t pay high interest rates. To avoid the accidental spending of your disaster fund keep your checking account for normal bills and expenses.

By: Joe Duggins

Home Equity Release

admin — Fri, 18 Sep 2009 22:18:30 +0000

Home Equity Line of Credit

Get cash using the value in your home

Home equity release is a way to access cash using the value which is ‘tied up’ in your house. It’s a line of credit that is available to homeowners over a certain age who have paid of some or all of their mortgage and want to continue living in their own home.

It is a complicated area of finance and before you enter into any agreement, carry out thorough research on the lender you are considering dealing with and also research the different types of loan available as well as ensuring you’re being offered a reasonable interest rate.

Who is eligible?
People over a certain age (usually from 50 years) HomeownersHow does it work?

Broadly speaking, there are two types of home equity loan; a home reversion plan and a lifetime mortgage. Within these loan types there are many variations and Interest rates. Repayment terms and other conditions will vary between different lenders. Here is a brief overview of how these schemes work:

Lifetime mortgage:
Continue to live in your home Receive a cash lump sum, regular income or both Make monthly interest payments on the loan Repay a pre-agreed amount when your house is sold Home reversion plan:
Continue to live in your own home Sell all or part of your home Receive a cash lump sum Pay little or no rent while you continue to live in your home Your loan is paid off when your house is eventually soldShould you take out a home equity loan?

Like any financial product, that decision depends on your individual circumstances and requirements. A home equity release scheme is a serious financial undertaking and it is absolutely vital that you thoroughly research all your options for raising funds before you commit to this type of financial arrangement:
Can you sell your current home and downsize? Are there any other assets you can sell?Always seek independent financial advice

Learn about the different types of home equity loan (we have covered only the basics here) and thoroughly research any lender you are considering doing business with. Don’t rush into any agreement, it’s important to be armed with all the information you need to make an informed decision and get the best deal available.

By: Maz Grundy

How to Use Home Equity Loans to Finance Your Business

admin — Thu, 17 Sep 2009 18:36:49 +0000

Many small business owners who are in need of financing do not realize the tremendous resources that are available at their fingertips. Those who own a home often have another type of loan available to them, the home equity loan or line of credit.

These loans eliminate some of the problems posed by collateral. If you own a home or part of a home, that ownership stake can be used as collateral instead. This has its pros and cons; it’s good because it is available to many more small business owners, but it could potentially become a problem if the borrower is unable to pay back the loan. In this case, the lending institution acquires an ownership stake in the home.

Home equity loans are generally available from banks in two forms-the traditional loan format and the revolving line of credit. The traditional bank loan form involves a lump sum, with interest payments made on the entire amount. The line of credit, on the other hand, essentially functions as a credit card does-your limit is tied to your home’s equity, and you only pay interest on the outstanding principal. Interest rates on both of these types of home equity loan are generally much lower than credit card interest rates.

The amount of money you can borrow with a home equity loan varies from bank-to-bank. However, most banks use a metric called the loan-to-value ratio. They measure the amount of debt you have against your home, and compare that to the value of the home. Banks feel comfortable loaning you money up to an 80% loan-to-value ratio. So, if you currently owe less than 80% of your home’s value, you can probably find a home equity loan to make up that remainder to finance your business.

By: Matthew Potter