What do you mean by 100% Finance Home Loan?
A 100% Finance Home Loan is a mortgage loan that allows you to avoid the hassles of paying for a house down payment. In simple words, a 100% finance home loan is a no deposit mortgage loan.
Who should avail of 100% Finance home loans?
This loan is for anyone who cannot or doesn’t want to prepare the down payment for the home. The usual range for the down payment rate is from five to ten percent of the house value. This is perfect for people with no personal savings, for newly wed couples who are just getting started to build their family, and for people who have a sudden need for a new home.
What are the benefits of getting a 100% Finance Home Loan?
When you opt for a no deposit home loan, all you have to worry about is the amount that will be used for the fees in applying and securing the said loan. You won’t have to wait for months or years in order for you to save some money for the down payment. You can instantly live in your dream house.
Other than that, you can even get mortgage loans that will cover the cost of closing on the property, or those that provide you with extra cash for furnishing the house.
What do you mean by credit score?
A credit score refers to a three-digit number that reflects your credit worthiness. The score is based on your bill-paying history and your debt profile. This helps your lenders determine your credit behavior and your capability to pay the amount you have loaned.
By knowing your credit score, you will have a comprehensive understanding of your credit profile. Note that lending companies use the credit score in determining what interest rate and payment schemes they will offer you. Basically, you ought to have a very high credit score if you are planning to apply for a 100% Finance home loan.
How do you compute for a credit score?
There are specific mathematical models that are used to compute for a credit score. Among the factors that are considered when computing your credit score are your past and present payment behavior, your present debts, how long have you had such debts, the type of credits that are available for you, and the type of credit that you are currently using. The figures generated from these factors are compared with the other payment histories of other borrowers to get your position.
How does getting a 100% Finance Home Loan affect my Credit Score?
When one avails of a no deposit home loan, the borrower is at risk of getting a “negative equity” for the house that he has purchased. This happens if the price of the house that you have bought depreciates. As such, the lending company will ask the borrower for additional charges in order to make up for the current market value of the house.
In cases when the borrower cannot pay for the additional fees, the lender can also sell off the collateral or the securities of the borrower. As a result, the negative equity may lower the credit score of the borrower as well.
By: Robert Diarioti
Posts Tagged ‘Capability’
FAQs – 100% Finance Home Loan and Your Credit Score
April 16th, 2010Rates and Terms of Commercial Development Finance
March 20th, 2010
When you are applying for commercial development finance, the deal will be individually priced so there are basically no set rates. The lenders from various development finance UK will look at what you propose to do, assess the property and the appropriate works to be done, and suggest a bespoke price accordingly.
Rates for commercial development finance from various lenders differ depending on the applicant’s experience. It depends on the type of property and the nature of the proposal too. But a good benchmark would be Bank Base Rate ranging from 1.5% to 2.5%.
Commercial financing is usually arranged on an interest only basis and loan term can be more than a year depending on the size and nature of the underlying project. Finance to project costs will be greatly influenced by projected gross development values but commercial development finance would typically be at seventy to seventy five percent of the property purchase price and build costs.
It is possible to get a loan for 100% development finance where the borrower already owns the land on an unencumbered basis or for experienced developers with a strong track record. With such experience, they would be able to detect and support the value of developed property. In short you will be borrowing against the end value of the property rather than its current value. There are also other arrangements in getting 100% development finance but what is needed is a strong potential of returns. The said high geared finance can be supported by mezzanine funding, equity or senior debt and each funding has certain appropriation on the project and capability of the developer.
By: Cherry Lynn Bonachita
