Posts Tagged ‘Interest Rate’

Property Developer Finance Needs Serious Consideration

April 28th, 2010



If you wish to develop residential or commercial property by way of expanding or building then you will have to give some thought to taking out property developer finance. Developer finance does not come with a set rate of interest like a residential mortgage. Instead the rate you will pay will be dependent on factors such as how much experience you have in the development field, the size of the project you are proposing and the type of project you are taking on.

There are many benefits to taking advice and help from a specialist. Of course they will offer advice freely and offer a huge amount of information on all aspects of property development. Along with this a broker can look around based on the information you give and then find you the cheapest rate of interest along with the best deal. A specialist will have access to lenders that you do not and will be able to team you up with a compatible one based on your individual circumstances.

When it comes to the interest rate then this will fluctuate greatly and can usually be between 1.5% and 2.5%. Of course different factors will affect this. The size and type of the project is one as is the type of project and the experience one has in property development. All lenders will also take into account your credit rating; if your credit rating is excellent then you will be offered the best rates possible. However a poor credit rating will mean that you pay a higher rate.

When it comes to choosing the term for your mortgage when looking for property developer finance a specialist can help you, a loan can usually be taken between 1 and 25 years or more depending on the size of the project. If you are taking on an extensive project that will cost a lot then you could be better off taking out an interest only mortgage. An interest only mortgage is cheaper when it comes to the monthly repayments; however this is due to the fact that you will only be paying the interest that has accumulated on the loan. This means that when the mortgage has been paid you will still have the capitol to repay in full. Some lenders ask that you can prove you have the resources before they will lend you the money.

If you choose to take a repayment mortgage then the amount you will repay each month will be dearer. However at the end of the mortgage you will not have to find a lump sum. This is because part of the monthly repayment will go towards paying the capitol and part the interest.

There is much to consider when it comes to property developer finance but there is help and advice out there. Choosing to go with a specialist will not only save you money but also an enormous amount of time. This is because a specialist will know from experience which lenders are more suited to your circumstances. They will then focus their quest for the best deal on these.

By: Sean Horton

FAQs – 100% Finance Home Loan and Your Credit Score

April 16th, 2010



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