By definition, Bridging Finance or Bridging Loan is a short-term loan used to purchase commercial property. This is something that can come in very handy, depending on your particular situation. There are two main points that you need to consider before you opt for a Bridging Finance package, your needs and the state of the property market.
The whole point of Bridging Finance is that it will allow you to close on a property and purchase a new property before you sell your existing one. You will need to evaluate your current situation to determine if your needs justify taking on this type of finance. Will you lose the new property if you can't offer a deposit? Would you be eligible for a discount on the purchase price if you can come up with the cash fast?
What are the existing market conditions in regard to the sale of your existing property? Is it going to be possible to sell your existing property in the time frame set out in your finance package? Most Bridging Finance typically runs for one year and will need to be paid in full at the end of the term unless it is possible to convert it into a Commercial Loan. You will also need to be aware that the interest rates will be higher on a Bridging Finance package.
If the market is slow and you do not have an urgent need for the new property, it may not be in the best interest of your business to take on this type of loan. On the other hand if the property market conditions are good, you can be out from under a Bridging Loan fast. However, it is still something that will need to make sense for your business.
If you feel taking on Bridging Finance is the right thing to do, you will be far better off going through a specialist Commercial Lender.
This will shorten the entire process as a specialist will know the market and they can quickly make a judgment on the best package for you, based on your particular circumstances. Be sure to check that the package can be converted into a conventional Commercial Finance package. You will also want to check on the type of interest rate and the costs you will entail if you do have to convert.
Most Commercial Lenders will be willing to extend the terms of the Bridging Finance package. Let's say, for example, you have a buyer and you are waiting for the sale to close. Bridging Finance in general is much more flexible and accommodating than you might expect in this respect.
Paying back your Bridging Loan at the end of the loan term more often than not depends on your ability to sell your existing property. If it does not sell in the required time, you will be paying the existing loan on your current property, your new property and the newly converted Bridge Finance as well.
If you believe this may be a possibility be sure to take a package that can be converted to a Commercial Loan if the need arises. Otherwise you may have to come up with the full Loan sum at the end of the term of the loan.
Friday, December 29, 2006
Thursday, October 19, 2006
Closing A Commercial Mortgage The Easy Way
'Time is Money' it's an old adage. Good timing can also amount to the same thing. Taking action at the right time can make all the difference between an easy commercial mortgage transaction and a major headache of stress and panic. In between the lenders offer and the commitment consider undertaking what you can to ease your commercial mortgage deal by anticipating and dealing with any problems or hiccups that may occur.
Try to intercept any future problems or anticipate extra work that could stall your commercial mortgage deal at the critical moment. If you take a little time to consider what is required you should be able to deal with them one by one in plenty of time.
Once you have agreed to an offer from a lender and you are waiting for the commitment you should go ahead and run the title searches. The title work can be ordered by your real estate attorney from any number of companies that will risk loosing their title search fee if the commercial mortgage deal doesn't go through.
The title work is a very slow and labour intensive process, so the earlier you start it the quicker it will be completed. Starting it early will also allow for any delays or other issues that may pop up prior to the commercial mortgage completion.
The survey is another potential headache. Surveys have differing specifications and your new lender may have specific requirements of the survey that may not appear in your existing survey documents. Check with your lender exactly what they require of a survey and order it on receiving your offer rather than at closing. Most surveyors are very busy and they can have a very slow turnaround.
So again the sooner you can get it underway the easier it will be to deal with any hitches.
Cut down on your mortgage recording tax. Ask your lender to take an assignment of the old mortgage. Early in the deal process you should let your new lender's attorneys look over and approve the old mortgage. This is generally quite quick if you work with your own attorney to ease the process.
Consider the structure of your commercial loan. Does it cover any future plans you may have to modify your property? e.g. you may wish to convert your new property into multiple apartments. Does your loan account for the 'whittling' down of your asset as apartments are sold? This is a simple example but it's better to be upfront at the start about the plans you may have for the future of your property.
Along similar lines you would be well advised to consider the possibility of an early payment penalty if you plan to sell on your property within a few years.
Make a 'To Do' list and use and any spare time to work through it and clear it. There are enough things that can go wrong or cause delays as the deal nears completion. Clear what you can before you get to closing the deal, in this way you can give the mortgage agreement your full attention rather than worry about the other jobs that still need to be done.
Looking for a UK Commercial Mortgage? Commercial Lifeline are specialists in Commercial Mortgages, Bridging Finance and Buy to Let Mortgages.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.
Try to intercept any future problems or anticipate extra work that could stall your commercial mortgage deal at the critical moment. If you take a little time to consider what is required you should be able to deal with them one by one in plenty of time.
Once you have agreed to an offer from a lender and you are waiting for the commitment you should go ahead and run the title searches. The title work can be ordered by your real estate attorney from any number of companies that will risk loosing their title search fee if the commercial mortgage deal doesn't go through.
The title work is a very slow and labour intensive process, so the earlier you start it the quicker it will be completed. Starting it early will also allow for any delays or other issues that may pop up prior to the commercial mortgage completion.
The survey is another potential headache. Surveys have differing specifications and your new lender may have specific requirements of the survey that may not appear in your existing survey documents. Check with your lender exactly what they require of a survey and order it on receiving your offer rather than at closing. Most surveyors are very busy and they can have a very slow turnaround.
So again the sooner you can get it underway the easier it will be to deal with any hitches.
Cut down on your mortgage recording tax. Ask your lender to take an assignment of the old mortgage. Early in the deal process you should let your new lender's attorneys look over and approve the old mortgage. This is generally quite quick if you work with your own attorney to ease the process.
Consider the structure of your commercial loan. Does it cover any future plans you may have to modify your property? e.g. you may wish to convert your new property into multiple apartments. Does your loan account for the 'whittling' down of your asset as apartments are sold? This is a simple example but it's better to be upfront at the start about the plans you may have for the future of your property.
Along similar lines you would be well advised to consider the possibility of an early payment penalty if you plan to sell on your property within a few years.
Make a 'To Do' list and use and any spare time to work through it and clear it. There are enough things that can go wrong or cause delays as the deal nears completion. Clear what you can before you get to closing the deal, in this way you can give the mortgage agreement your full attention rather than worry about the other jobs that still need to be done.
Looking for a UK Commercial Mortgage? Commercial Lifeline are specialists in Commercial Mortgages, Bridging Finance and Buy to Let Mortgages.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.
Why Use Bridging Finance?
Traditionally Bridging Finance, or Bridging Loan as it is also known, has been used to 'bridge' the financial gap between the sale of one property and the purchase of another. Allowing borrowers to purchase the second property before selling their existing property.
Numerous other uses for Bridging Finance include -
* Allowing Buy to Let investors achieve a discount for a faster completion
* Auction purchases, where funds are required quickly to complete the purchase
* Entrepreneurs requiring a quick injection of cash to fund a new business opportunity
* Property developers, utilizing the speed of Bridging loan to quickly buy and sell on a property
Fast Cash When You Need It Most
The traditional mortgage application route is well known for the snails pace at which it can sometimes operate. At the speed we live in today's postmodern age this can be a very frustrating state of affairs.
The property market has numerous opportunities but many can be left on the shelf. Either through the chain collapsing or the lender not having funds in place quickly enough. To add to this a discount on a property is a definite possibility if funding can be arranged quickly enough. Bridging Finance is a fast and easy solution to all these headaches.
But why is this? It's very simple. Bridging Finance tends to be 'Non-Status'. Lenders consider the type and quality of the property as security as a measure of the lending possibility.
Unlike traditional lending bridging underwriters are generally looking at minimum lending terms of between 3 months, 6 months or 12 months. But some lenders are even more flexible in this regard and will lend with no minimum period on the loan. Lending is available at up to 75% LTV (Loan-To-Value), in some cases 85% LTV may be available. Apart from credit checks, the non-status factor is the same as mainstream non-status lending. The benefit is that the decision to lend is very much faster.
A Short Term Solution
Bridging Finance can bridge a financial gap. But it should never really be considered a permanent solution. A more permanent solution in the form of a regular mortgage should be considered if the property is to be held on to long-term. Or in the case of a more speculative investment the borrower will sell the property to make a quick profit.
Bridging Finance is flexible in another way. In terms of the redemption date it can set as both 'open' with no definite end to the loan, or 'closed' with a set redemption date. It is advisable to only use the open variety when you are confident of the sale of a property or the replacing of the loan with a more long-term finance solution.
Bridging Finance remains the fastest and most appropriate loan type for making a property purchase quickly.
About the Author
Looking for UK Bridging Finance? Commercial Lifeline are Bridging Finance specialists.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.
Numerous other uses for Bridging Finance include -
* Allowing Buy to Let investors achieve a discount for a faster completion
* Auction purchases, where funds are required quickly to complete the purchase
* Entrepreneurs requiring a quick injection of cash to fund a new business opportunity
* Property developers, utilizing the speed of Bridging loan to quickly buy and sell on a property
Fast Cash When You Need It Most
The traditional mortgage application route is well known for the snails pace at which it can sometimes operate. At the speed we live in today's postmodern age this can be a very frustrating state of affairs.
The property market has numerous opportunities but many can be left on the shelf. Either through the chain collapsing or the lender not having funds in place quickly enough. To add to this a discount on a property is a definite possibility if funding can be arranged quickly enough. Bridging Finance is a fast and easy solution to all these headaches.
But why is this? It's very simple. Bridging Finance tends to be 'Non-Status'. Lenders consider the type and quality of the property as security as a measure of the lending possibility.
Unlike traditional lending bridging underwriters are generally looking at minimum lending terms of between 3 months, 6 months or 12 months. But some lenders are even more flexible in this regard and will lend with no minimum period on the loan. Lending is available at up to 75% LTV (Loan-To-Value), in some cases 85% LTV may be available. Apart from credit checks, the non-status factor is the same as mainstream non-status lending. The benefit is that the decision to lend is very much faster.
A Short Term Solution
Bridging Finance can bridge a financial gap. But it should never really be considered a permanent solution. A more permanent solution in the form of a regular mortgage should be considered if the property is to be held on to long-term. Or in the case of a more speculative investment the borrower will sell the property to make a quick profit.
Bridging Finance is flexible in another way. In terms of the redemption date it can set as both 'open' with no definite end to the loan, or 'closed' with a set redemption date. It is advisable to only use the open variety when you are confident of the sale of a property or the replacing of the loan with a more long-term finance solution.
Bridging Finance remains the fastest and most appropriate loan type for making a property purchase quickly.
About the Author
Looking for UK Bridging Finance? Commercial Lifeline are Bridging Finance specialists.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.
Friday, June 30, 2006
Why Cheap Term Life Insurance Isn’t Always So Cheap
You’ve heard a lot of talk about cheap term life insurance and you’ve decided that it’s something you need to start investigating. That’s definitely a step in the right direction. Like so many other tasks in life, you’ve turned to the Internet to get the ball rolling.
You’ve filled out numerous online applications for cheap term life insurance but as the quotes start to come back you’re realizing that term life insurance isn’t really all that cheap. What’s going on?
Your health matters
A couple of factors might be causing higher than anticipated term life insurance costs. First and foremost is the general state of your health. Getting an online quotation is one thing, but pricing an actual policy after the life insurance company has reviewed your medical history is really what determines your true costs for life insurance.
Very rarely will an individual get life insurance without first having a medical examination. Getting a policy through your place of employment is the only time this may happen, but generally in this situation, your coverage will be minimal.
If you’re looking for cheap term life insurance that’ll actually be of financial value after you’re gone, you’ll likely have to supplement the policy you get through your job.
Let’s take a look at the logic for a moment. If given the choice, life insurance companies would select as customers only those whose health is excellent. Excellent health means you should live longer. When you live long there is less chance that the insurance company will have to pay out your policy’s death benefits.
In other words, if you outlive your cheap term life insurance policy, the insurance company comes out ahead. The company has collected your premiums, but it did not have to give any money back to your beneficiaries.
The categorization system
When determining the true cost of a policy, life insurance companies use a classification system. Individuals with a clean bill of health generally get classified as “super preferred” and get the lowest-priced premiums. They’re the ones who get cheap term life insurance. Several more categories exist and, unfortunately, each category comes with a progressively higher premium.
Some of the health conditions that raise a red flag in the eyes of an insurance company include use of tobacco products, being overweight, high cholesterol, high blood pressure, and a history of cancer, stroke, diabetes, heart disease or other type of chronic disease in your family, even if you do not have any symptoms of these conditions.
If you do have symptoms of the above conditions, you should expect that cheap term life insurance isn’t something for which you’ll qualify.
The types of medical conditions listed above are more likely to cause premature death in an individual. If the insured individual dies during the life insurance policy term, the insurance company will have to pay out death benefits. And that’s what life insurance companies look at when deciding whether or not an individual qualifies for cheap term life insurance.
Find Cheap Term Life Insurance in the UK. You will not believe how low our rates can go.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
You’ve filled out numerous online applications for cheap term life insurance but as the quotes start to come back you’re realizing that term life insurance isn’t really all that cheap. What’s going on?
Your health matters
A couple of factors might be causing higher than anticipated term life insurance costs. First and foremost is the general state of your health. Getting an online quotation is one thing, but pricing an actual policy after the life insurance company has reviewed your medical history is really what determines your true costs for life insurance.
Very rarely will an individual get life insurance without first having a medical examination. Getting a policy through your place of employment is the only time this may happen, but generally in this situation, your coverage will be minimal.
If you’re looking for cheap term life insurance that’ll actually be of financial value after you’re gone, you’ll likely have to supplement the policy you get through your job.
Let’s take a look at the logic for a moment. If given the choice, life insurance companies would select as customers only those whose health is excellent. Excellent health means you should live longer. When you live long there is less chance that the insurance company will have to pay out your policy’s death benefits.
In other words, if you outlive your cheap term life insurance policy, the insurance company comes out ahead. The company has collected your premiums, but it did not have to give any money back to your beneficiaries.
The categorization system
When determining the true cost of a policy, life insurance companies use a classification system. Individuals with a clean bill of health generally get classified as “super preferred” and get the lowest-priced premiums. They’re the ones who get cheap term life insurance. Several more categories exist and, unfortunately, each category comes with a progressively higher premium.
Some of the health conditions that raise a red flag in the eyes of an insurance company include use of tobacco products, being overweight, high cholesterol, high blood pressure, and a history of cancer, stroke, diabetes, heart disease or other type of chronic disease in your family, even if you do not have any symptoms of these conditions.
If you do have symptoms of the above conditions, you should expect that cheap term life insurance isn’t something for which you’ll qualify.
The types of medical conditions listed above are more likely to cause premature death in an individual. If the insured individual dies during the life insurance policy term, the insurance company will have to pay out death benefits. And that’s what life insurance companies look at when deciding whether or not an individual qualifies for cheap term life insurance.
Find Cheap Term Life Insurance in the UK. You will not believe how low our rates can go.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
Life Insurance Money Saving Tips
Life insurance, specifically Term Life, is arguably one of the best values in the entire financial services arena. Where else can you go and get hundreds of thousands of pounds in protection for literally pennies per day? Rates for Term Life insurance remain at all-time lows, and now is the time to lock in the best prices. Here are some ways to help you save money when purchasing life insurance.
Buy when you're young. Although your financial needs may be lower at a younger age, the rates are also substantially cheaper when you’re young. Remember, the goal is to cover your primary assets (like your salary and house) so that if something were to happen to you, your beneficiaries would be able to persevere financially. The best advice is to lock in as much protection at a young age while your health and prices are still good.
Your “half” birthday could be costly. While some companies raise their prices based on your actual age, most companies increase the price of their policies six months before your birthday. It’s a term called “Age Nearest” in the industry, and that half-year price increase could really add up over a 20-year term policy.
Buy before any major health issues arise. Healthy people have the best mortality risks and thus are much cheaper for companies to insure. This translates into lower rates for the “Super Preferred” customer than someone with higher risk factors such as a heart condition, cancer or diabetes. Conversely, if you were unhealthy when you acquired your policy, and your health has now improved, it might be time to shop for a new policy, as your rates are likely to be lower.
Select the right length of coverage. Everyone has different needs, and not one size fits all when it comes to term life insurance. While it may make sense for people in their 30s and 40s to secure a 20-year term length, a 10-year term might be more appropriate for someone nearing retirement.
People who are trying to quit smoking, for example, might be best suited purchasing a shorter term (and then replacing it with a longer term policy when they qualify for non-tobacco prices). Lastly, individuals who have 30-year mortgages might want to consider a 30-year term to ensure that the house is protected throughout the period of the loan.
Check for price breaks. Companies often offer "price breaks" at certain coverage amounts (i.e. £250,000 vs. £225,000). The truth is that many people can actually pay less money for more coverage. Check how much or little your prices increase when you increase coverage to £250,000, £500,000, or £1,000,000.
Buy the right amount of coverage. Many agents may try to sell you more coverage than you need. The purpose of life insurance is to “indemnify” (replace financial loss), and what most people should be looking for is income replacement for their beneficiaries. Independent financial planners recommend the following rule of thumb: purchase an amount of coverage equal to 6-10 times your annual gross income.
The right hobby with the wrong company could cost you. People who participate in high-risk sports or activities (such as hang-gliding, skydiving, mountain climbing, scuba diving, and racing), or even those who like to have an occasional cigar could very well pay more money if they don’t pick the right company.
Every company looks at risk factors differently and some are more liberal in certain areas than others. Make sure you work with an insurance company that has properly matched your personal profile with their underwriting criteria.
Work policies aren’t always the best deal. . Work policies are often based on a composite profile of the employees you work with, many of whom may be less healthy than you, or have other underwriting factors that might drive up rates.
These type of policies also expire if/when you leave the company. Inexpensive term life insurance polices that cover your dependents until they can live comfortably on their own are often a better alternative.
Check out your payment options. Many life insurance companies offer discounts to consumers who pay their premiums annually.
Review your policy often. Do a review of your life insurance policy a minimum of every three years, if not more often. Rates may be lower, and your circumstances may have changed, necessitating more or less protection. If you are replacing a policy, make sure you allow enough time to get your new policy in place so coverages won’t overlap or lapse.
Don’t overspend on protection. Term life insurance is the most affordable and cost-effective pure protection available, and it is typically much less expensive than a comparable whole life policy. The old axiom still rings true: “Buy Term and invest the difference.”
Find Cheap Life Insurance in the UK. We are independent insurance brokers sourcing the lowest rate possible and then lowering it further still.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
Buy when you're young. Although your financial needs may be lower at a younger age, the rates are also substantially cheaper when you’re young. Remember, the goal is to cover your primary assets (like your salary and house) so that if something were to happen to you, your beneficiaries would be able to persevere financially. The best advice is to lock in as much protection at a young age while your health and prices are still good.
Your “half” birthday could be costly. While some companies raise their prices based on your actual age, most companies increase the price of their policies six months before your birthday. It’s a term called “Age Nearest” in the industry, and that half-year price increase could really add up over a 20-year term policy.
Buy before any major health issues arise. Healthy people have the best mortality risks and thus are much cheaper for companies to insure. This translates into lower rates for the “Super Preferred” customer than someone with higher risk factors such as a heart condition, cancer or diabetes. Conversely, if you were unhealthy when you acquired your policy, and your health has now improved, it might be time to shop for a new policy, as your rates are likely to be lower.
Select the right length of coverage. Everyone has different needs, and not one size fits all when it comes to term life insurance. While it may make sense for people in their 30s and 40s to secure a 20-year term length, a 10-year term might be more appropriate for someone nearing retirement.
People who are trying to quit smoking, for example, might be best suited purchasing a shorter term (and then replacing it with a longer term policy when they qualify for non-tobacco prices). Lastly, individuals who have 30-year mortgages might want to consider a 30-year term to ensure that the house is protected throughout the period of the loan.
Check for price breaks. Companies often offer "price breaks" at certain coverage amounts (i.e. £250,000 vs. £225,000). The truth is that many people can actually pay less money for more coverage. Check how much or little your prices increase when you increase coverage to £250,000, £500,000, or £1,000,000.
Buy the right amount of coverage. Many agents may try to sell you more coverage than you need. The purpose of life insurance is to “indemnify” (replace financial loss), and what most people should be looking for is income replacement for their beneficiaries. Independent financial planners recommend the following rule of thumb: purchase an amount of coverage equal to 6-10 times your annual gross income.
The right hobby with the wrong company could cost you. People who participate in high-risk sports or activities (such as hang-gliding, skydiving, mountain climbing, scuba diving, and racing), or even those who like to have an occasional cigar could very well pay more money if they don’t pick the right company.
Every company looks at risk factors differently and some are more liberal in certain areas than others. Make sure you work with an insurance company that has properly matched your personal profile with their underwriting criteria.
Work policies aren’t always the best deal. . Work policies are often based on a composite profile of the employees you work with, many of whom may be less healthy than you, or have other underwriting factors that might drive up rates.
These type of policies also expire if/when you leave the company. Inexpensive term life insurance polices that cover your dependents until they can live comfortably on their own are often a better alternative.
Check out your payment options. Many life insurance companies offer discounts to consumers who pay their premiums annually.
Review your policy often. Do a review of your life insurance policy a minimum of every three years, if not more often. Rates may be lower, and your circumstances may have changed, necessitating more or less protection. If you are replacing a policy, make sure you allow enough time to get your new policy in place so coverages won’t overlap or lapse.
Don’t overspend on protection. Term life insurance is the most affordable and cost-effective pure protection available, and it is typically much less expensive than a comparable whole life policy. The old axiom still rings true: “Buy Term and invest the difference.”
Find Cheap Life Insurance in the UK. We are independent insurance brokers sourcing the lowest rate possible and then lowering it further still.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
Tuesday, March 07, 2006
How to Check Your Credit Rating And How It Affects You
Did you know that each time you take up any kind of credit or loan, or pay one back, it adds to your credit rating. Who keeps a record on you will vary according to where you live, but the three major credit reference agencies are Equifax, Experian and Trans Union. They will supply your credit rating to any business that is considering lending to you.
What Does Your Credit Rating Reveal.
All your current debts are incorporated in to your credit rating. Believe it or not there is a history of all the debts you've had in the past ten years or so, and special note is made of anything that has gone wrong. A Default (missing a payment) on any debt can damage your credit rating. Borrowing a lot before you start paying anything back will make you seem like a very bad risk, as will going all the way up to (or even over) your limit on a credit card.
It's also worth bearing in mind that the credit reports of anyone you live with may be linked to your own report, and in turn could reflect badly on you - your partner's credit rating is coupled to your own quite intimately.
How Your Credit Rating is Worked Out.
'FICO', named after the Fair Isaac Corporation, who invented it, is the most common method of coming up with your rating. Your present credit status is prioritised thus:
1: Whether you've paid previous debts
2: How much debt you now have
3: Your credit history
4: What types of debt you use
5: How many times your credit rating has been checked of late
Things that happened in recent times are given more weight than things that happened a while ago.
Your Credit Rating is Significant.
Each time you get declined for a credit card or any other type of loan, the odds are that it was because of your credit rating. Companies handing over small loans are far more probable to rely entirely on this rating than to bother checking your income, and a poorer rating will mean that you are offered a higher interest rate.
Your rating is important when you get mortgages, loans or car finance too. You wouldn't want to find a house you love only to get declined a mortgage thanks to your habit of paying your credit card bills late.
How Do You Check Your Credit Rating.
Credit reference agencies are not allowed to hold your information on file without disclosing what it is they have. If you write them a letter and pay a small fee, they must send you the full credit report they hold on you.
You can then look over your credit rating and contact them if you discover something that is incorrect. You might find an error has made you look bad or there is a mistake. They store anything you report in your file.
It is possible in some countries to sign up and get credit reports frequently for a small fee, or even free!
Check your local laws to see if this is possible.
Get more help and advice on Credit, Debt, Mortgages, Investing, Real Estate etc. From www.1stFinanceGuide.com.
This article comes with reprint rights. You are free to reprint and distribute it as you like. All that we ask is that you do not make any changes, that this resource text is included and that the link above is intact.
What Does Your Credit Rating Reveal.
All your current debts are incorporated in to your credit rating. Believe it or not there is a history of all the debts you've had in the past ten years or so, and special note is made of anything that has gone wrong. A Default (missing a payment) on any debt can damage your credit rating. Borrowing a lot before you start paying anything back will make you seem like a very bad risk, as will going all the way up to (or even over) your limit on a credit card.
It's also worth bearing in mind that the credit reports of anyone you live with may be linked to your own report, and in turn could reflect badly on you - your partner's credit rating is coupled to your own quite intimately.
How Your Credit Rating is Worked Out.
'FICO', named after the Fair Isaac Corporation, who invented it, is the most common method of coming up with your rating. Your present credit status is prioritised thus:
1: Whether you've paid previous debts
2: How much debt you now have
3: Your credit history
4: What types of debt you use
5: How many times your credit rating has been checked of late
Things that happened in recent times are given more weight than things that happened a while ago.
Your Credit Rating is Significant.
Each time you get declined for a credit card or any other type of loan, the odds are that it was because of your credit rating. Companies handing over small loans are far more probable to rely entirely on this rating than to bother checking your income, and a poorer rating will mean that you are offered a higher interest rate.
Your rating is important when you get mortgages, loans or car finance too. You wouldn't want to find a house you love only to get declined a mortgage thanks to your habit of paying your credit card bills late.
How Do You Check Your Credit Rating.
Credit reference agencies are not allowed to hold your information on file without disclosing what it is they have. If you write them a letter and pay a small fee, they must send you the full credit report they hold on you.
You can then look over your credit rating and contact them if you discover something that is incorrect. You might find an error has made you look bad or there is a mistake. They store anything you report in your file.
It is possible in some countries to sign up and get credit reports frequently for a small fee, or even free!
Check your local laws to see if this is possible.
Get more help and advice on Credit, Debt, Mortgages, Investing, Real Estate etc. From www.1stFinanceGuide.com.
This article comes with reprint rights. You are free to reprint and distribute it as you like. All that we ask is that you do not make any changes, that this resource text is included and that the link above is intact.
Friday, March 03, 2006
Stop Saving If You Have Debt!
People are funny. We don't always do what's best for us instead we do what feels best and try to suppress any reasons why it may not be the best thing to do. Perhaps that's why there are so many people that have both savings and debts.
It's Simple Commonsense.
It just feels better to save. In saving you feel like you are laying a foundation for the future, whereas on the other hand paying off debt almost feels like throwing your money away. You're saving that money for improving your house, or for the kids' education, or suchlike, in an account with a decent rate of interest. What could possibly be wrong with that? Plenty, if you have debts.
Don't Be Foolish With Debt.
There are pretty much no savings accounts that will offer interest rates as high as what the credit card companies charge.
Here's an example:
Say have $10,000 in a savings account at 5% per year
$5,000 on a credit card at an interest rate of 20% per year
How much money do you boast?
After as little as five years, the answer is effectively $0 - your debt will have grown to around $12,000, the same total that your savings are now worth.
It's difficult to accept as true right now, but it really is much healthier to pay off your debt. If you used half your savings to pay off that debt, you'd be in such a better place. You avoid five years of interest on the debt, but you still get to keep that $5,000 in your savings account, earning interest and after five years, that's about $6,180.
If you'd still prefer to keep your savings intact rather than using them to pay off your debts, ask yourself this basic question: is your pride worth $6,380 of your family's money?
Consider A Debt Free Future.
When you have money enough to pay off your debt, there's entirely no reason to keep it. Debt is for people who don't have the money, and need to borrow it. Debt costs money, and savings make money - you want as much of your finances as achievable to be savings, not debts.
If your savings account and credit card are from the same bank, then you're in effect paying for the opportunity to borrow your own money from them. How ridiculous does that sound?
By paying off your debt with savings you'll also be less stressed about your debts, and your credit report score will rise - getting you a much better interest rate if you ever need to go into debt again.
It can be tough. You just have to keep in mind that any money you've 'saved' hasn't in reality been saved at all. It's money you should have been spending instead of making purchases with a credit card.
Of course, it feels bad to spend money thinking that you're spending away your future - but always bear in mind that when you use a credit card to spend that same money, you're spending away your future, plus interest. As it goes, if you've got the debt, then those savings have already been spent.
About the Author
Get more help and advice on Debt, Credit Cards, Mortgages, Investing, Real Estate, etc. From www.1stFinanceGuide.com.
This article comes with reprint rights. You are free to reprint and distribute it as you like. All that we ask is that you do not make any changes, that this resource text is included and that the link above is intact.
It's Simple Commonsense.
It just feels better to save. In saving you feel like you are laying a foundation for the future, whereas on the other hand paying off debt almost feels like throwing your money away. You're saving that money for improving your house, or for the kids' education, or suchlike, in an account with a decent rate of interest. What could possibly be wrong with that? Plenty, if you have debts.
Don't Be Foolish With Debt.
There are pretty much no savings accounts that will offer interest rates as high as what the credit card companies charge.
Here's an example:
Say have $10,000 in a savings account at 5% per year
$5,000 on a credit card at an interest rate of 20% per year
How much money do you boast?
After as little as five years, the answer is effectively $0 - your debt will have grown to around $12,000, the same total that your savings are now worth.
It's difficult to accept as true right now, but it really is much healthier to pay off your debt. If you used half your savings to pay off that debt, you'd be in such a better place. You avoid five years of interest on the debt, but you still get to keep that $5,000 in your savings account, earning interest and after five years, that's about $6,180.
If you'd still prefer to keep your savings intact rather than using them to pay off your debts, ask yourself this basic question: is your pride worth $6,380 of your family's money?
Consider A Debt Free Future.
When you have money enough to pay off your debt, there's entirely no reason to keep it. Debt is for people who don't have the money, and need to borrow it. Debt costs money, and savings make money - you want as much of your finances as achievable to be savings, not debts.
If your savings account and credit card are from the same bank, then you're in effect paying for the opportunity to borrow your own money from them. How ridiculous does that sound?
By paying off your debt with savings you'll also be less stressed about your debts, and your credit report score will rise - getting you a much better interest rate if you ever need to go into debt again.
It can be tough. You just have to keep in mind that any money you've 'saved' hasn't in reality been saved at all. It's money you should have been spending instead of making purchases with a credit card.
Of course, it feels bad to spend money thinking that you're spending away your future - but always bear in mind that when you use a credit card to spend that same money, you're spending away your future, plus interest. As it goes, if you've got the debt, then those savings have already been spent.
About the Author
Get more help and advice on Debt, Credit Cards, Mortgages, Investing, Real Estate, etc. From www.1stFinanceGuide.com.
This article comes with reprint rights. You are free to reprint and distribute it as you like. All that we ask is that you do not make any changes, that this resource text is included and that the link above is intact.
Monday, January 16, 2006
Debt Stress And Debt Relief
Whenever you hear discussion of credit card debt, the various best ways to manage it and clear it etc., one thing is mostly ignored. Credit card debt can be extremely stressful and it can have a very negative impact on your life.
It’s always hanging over you, getting you down, making it difficult to live your life the way you would like to. This article takes a look at how to recognise debt stress, and what you can do about it.
The Symptoms of Debt Stress
There are numerous symptoms that can be caused by stress. Some of the most common ones are:
feeling depressed and irritable
headaches
not being able to sleep
forgetfulness
lack of concentration
If you have some of these symptoms but you're unsure whether they are related to stress a visit to your Doctor may be in order.
Who Gets Debt Stress?
Just about everybody that has debts gets stressed about them. Debt results in millions of days off work every year and it's statistically one of the leading causes of suicide. When you read about someone who has committed suicide it's very common to find their name is followed by “who owed [a very large amount] in debts”.
Students and graduates are among the most vunerable, as debt is growing here faster than in any other sector of society.
It's very easy for anybody to rely on their credit card, a little here and a little there and before you know it you owe thousands.
The average adult now owes many thousands in debts, tens of thousands even and as that’s the average, then it stands to reason that many people must owe much more.
This being the case then always remember that you’re not alone, other people are suffering in the same way and there may well be many worse off than you.
How Do You Deal With It?
The perception of stress caused by debt is often of embarrassment or shame. People with lots of debts don’t want to talk about it, even with their family or close friends, for fear of upsetting people or looking like a failure.
It's essential that you talk about your problems, storing it up inside will result in even more stress. If you talk to no one else you should at least talk to your partner. They are in the best position to understand and possibly help you.
When you're ready to confront your debt stress probably the best route is to find two people outside of your partner, one who can advise you and one who can act as a counsellor.
That means a professional who knows what they’re doing in regard to financial matters and possibly a psychologist or psychiatrist or some other kind of counsellor. Don’t let stigmas deter you, this is about your health which is much more important.
The next thing to do is to consider how you created the debt to begin with. Dig out your old credit card statements. What did you spend the money on?
By far the best way to defeat your debt stress is to pay back your debts.
You need to sit down and work out a budget based on your income and expenditure, cut as many unnecessary expenses as possible and try to free up as much money as you can to pay back the debts.
Even if it will take a while to clear the debt you know that your debt is gradually going down and as it does your debt stress will follow.
About The Author
Get General Finance help and advice on Credit Cards, Mortgages, Debt, Investing, Real Estate, etc.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
It’s always hanging over you, getting you down, making it difficult to live your life the way you would like to. This article takes a look at how to recognise debt stress, and what you can do about it.
The Symptoms of Debt Stress
There are numerous symptoms that can be caused by stress. Some of the most common ones are:
feeling depressed and irritable
headaches
not being able to sleep
forgetfulness
lack of concentration
If you have some of these symptoms but you're unsure whether they are related to stress a visit to your Doctor may be in order.
Who Gets Debt Stress?
Just about everybody that has debts gets stressed about them. Debt results in millions of days off work every year and it's statistically one of the leading causes of suicide. When you read about someone who has committed suicide it's very common to find their name is followed by “who owed [a very large amount] in debts”.
Students and graduates are among the most vunerable, as debt is growing here faster than in any other sector of society.
It's very easy for anybody to rely on their credit card, a little here and a little there and before you know it you owe thousands.
The average adult now owes many thousands in debts, tens of thousands even and as that’s the average, then it stands to reason that many people must owe much more.
This being the case then always remember that you’re not alone, other people are suffering in the same way and there may well be many worse off than you.
How Do You Deal With It?
The perception of stress caused by debt is often of embarrassment or shame. People with lots of debts don’t want to talk about it, even with their family or close friends, for fear of upsetting people or looking like a failure.
It's essential that you talk about your problems, storing it up inside will result in even more stress. If you talk to no one else you should at least talk to your partner. They are in the best position to understand and possibly help you.
When you're ready to confront your debt stress probably the best route is to find two people outside of your partner, one who can advise you and one who can act as a counsellor.
That means a professional who knows what they’re doing in regard to financial matters and possibly a psychologist or psychiatrist or some other kind of counsellor. Don’t let stigmas deter you, this is about your health which is much more important.
The next thing to do is to consider how you created the debt to begin with. Dig out your old credit card statements. What did you spend the money on?
By far the best way to defeat your debt stress is to pay back your debts.
You need to sit down and work out a budget based on your income and expenditure, cut as many unnecessary expenses as possible and try to free up as much money as you can to pay back the debts.
Even if it will take a while to clear the debt you know that your debt is gradually going down and as it does your debt stress will follow.
About The Author
Get General Finance help and advice on Credit Cards, Mortgages, Debt, Investing, Real Estate, etc.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
Friday, January 13, 2006
The Credit Card Cheque and Cash Advance
If you’ve got a credit card did you know that you can do more with it than just use it for payments. For one you may receive a credit card cheque book which will enable you to pay with your card account via a cheque. For those times when a credit card will not be accepted.
You may also have the opportunity to get a cash advance. A means of withdrawing cash directly from your credit cardeither from a cash machine or directly to your bank account. This is great if you need cash in an emergency. But there's a catch to both these credit card account features, so be wary.
You Will Pay Much More Interest for the Service
Almost all credit cards charge a much higher interest for credit card cheques or a cash advance. You may forfeit any interest-free period, which means that you will start paying interest on the money the minute you spend the money. You will also find that most cards will also charge a fee each time you take a cash advance or use a credit card cheque. Plus using an ATM could raise the fee further still.
You Will Pop Up On The Credit Company Radar
Whenever you use a credit card cheque or take a cash advance, you’re revealing the fact that you’re not just using a credit card for it's convenience, you really do need the money. This will be recorded and noted in the credit card company’s records and mark you as someone who possibly shouldn’t receive the best deal. As they see it, you won’t be going anywhere.
Spend With the Credit Card Where Possible
Try avoiding using cash to pay for small things and only to find you have to take a cash advance or use a credit cheque to pay for bigger things. Instead do it the other way around. If you’re in a situation where you’re relying on a cash advance, you should start using your card for the smaller things where you wouldn’t usually consider it, in order to avoid taking the advances and paying the extra interest. Think carefully how you spend.
There are few bills now that need to be paid for with a cheque, consequently there are fewer reasons to ever use a credit card cheque. If you’re willing to make a call and wait in their queue for a while or there's a facility to pay online, the chances are you can get them to accept a credit card payment. Most companies accept credit cards now. The fact is they're loosing out if they don't.
Be Wary Of Advance Limits
If you start to rely on cash advances, you’ll eventually run into an advance limit. The credit card companies don’t advertise it, but many of them have limits on how much of your balance can be cash advances and how much must be in purchases. Check these limits before you start taking cash advances.
Cash Advances Get Paid Off Last
When you begin to pay back your credit card balance, most lenders will put your payments towards the lowest-interest money, your purchases, first and once this is cleared towards any other lending. This being the case you will always be paying the higher interest on the cash advance or cheque until you clear your credit card debt completely and get your balance back to zero.
About The Author
Get free General Finance help and advice from www.1stfinanceguide.com. Credit Cards, Mortgages, Debt, Investment, Real Estate etc.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
You may also have the opportunity to get a cash advance. A means of withdrawing cash directly from your credit cardeither from a cash machine or directly to your bank account. This is great if you need cash in an emergency. But there's a catch to both these credit card account features, so be wary.
You Will Pay Much More Interest for the Service
Almost all credit cards charge a much higher interest for credit card cheques or a cash advance. You may forfeit any interest-free period, which means that you will start paying interest on the money the minute you spend the money. You will also find that most cards will also charge a fee each time you take a cash advance or use a credit card cheque. Plus using an ATM could raise the fee further still.
You Will Pop Up On The Credit Company Radar
Whenever you use a credit card cheque or take a cash advance, you’re revealing the fact that you’re not just using a credit card for it's convenience, you really do need the money. This will be recorded and noted in the credit card company’s records and mark you as someone who possibly shouldn’t receive the best deal. As they see it, you won’t be going anywhere.
Spend With the Credit Card Where Possible
Try avoiding using cash to pay for small things and only to find you have to take a cash advance or use a credit cheque to pay for bigger things. Instead do it the other way around. If you’re in a situation where you’re relying on a cash advance, you should start using your card for the smaller things where you wouldn’t usually consider it, in order to avoid taking the advances and paying the extra interest. Think carefully how you spend.
There are few bills now that need to be paid for with a cheque, consequently there are fewer reasons to ever use a credit card cheque. If you’re willing to make a call and wait in their queue for a while or there's a facility to pay online, the chances are you can get them to accept a credit card payment. Most companies accept credit cards now. The fact is they're loosing out if they don't.
Be Wary Of Advance Limits
If you start to rely on cash advances, you’ll eventually run into an advance limit. The credit card companies don’t advertise it, but many of them have limits on how much of your balance can be cash advances and how much must be in purchases. Check these limits before you start taking cash advances.
Cash Advances Get Paid Off Last
When you begin to pay back your credit card balance, most lenders will put your payments towards the lowest-interest money, your purchases, first and once this is cleared towards any other lending. This being the case you will always be paying the higher interest on the cash advance or cheque until you clear your credit card debt completely and get your balance back to zero.
About The Author
Get free General Finance help and advice from www.1stfinanceguide.com. Credit Cards, Mortgages, Debt, Investment, Real Estate etc.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the link above is intact.
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