5 Must-Know Types of Mortgage Loans

Mortgage loans are loans taken from banks, online brokers or independent mortgage brokers by pledging property owned for purchasing a residential or commercial property or to refinance a loan. Mortgage loans are usually for a 15 or 30 year period. Mortgage payments are evened out according to the number of years, the rate of interest and the type of mortgage. The property purchased is used as security or collateral to obtain the debt. If the borrower of the loan defaults on the mortgage payments the lender has the right to sell the property by employing the foreclosure process.

To be eligible for a particular loan the lender examines the employment and income generation of an individual or family to assess that monthly payment can be paid regularly by the borrower. The three important aspects that are taken into consideration to qualify for a loan are Credit Score, Monthly Income and Down Payment. Credit scores indicate the risk of offering a loan to a borrower. Higher the score lowers the risk. Good credit scores also ensure reasonable terms of the loan and a lower rate of interest. Monthly income is evaluated to ensure expenses are not more than income. The amount paid as down payment reduces the risk of the lender to cover the full expense of the loan in case of default in payments.

There are different types of mortgage loans available to suit the requirements of different borrowers. Here are the following:

  • Fixed Rate Mortgages are among the most popular mortgage products which are not influenced by interest rate rise or falls. The interest rates are locked, and payments remain the same despite rising or fall in interest rates. Fixed rate mortgages are most popular when interest rates decline.
  • Adjustable rate mortgages provide a fixed rate of interest for a specific period and thereafter resorts to an adjustable rate of interest. It fluctuates according to market interest rate changes after the fixed rate period is complete.
  • Balloon Mortgage allows borrowers a lower rate and monthly payments for a period. Such a period lasts for three to ten years. After the completion of the term the borrower is required to pay the principal balance as a lump sum amount. If applicable and possible the balloon mortgage can also be converted to a fixed rate or adjustable rate loan.
  • Home Equity Line of Credit is variable rate mortgages in line with the prime rate. You are allowed to take a credit up to your credit limit which is the maximum amount one can borrow under any plan. The interest payments are tax deductible and one can also pay the previous mortgage by taking a percentage of the appraised value of the home such that the loan amount covers your previous loan balance and your current fund requirements.
  • The Interest-Only Mortgage requires only interest payments to be paid for a specific period of time following which the terms of the loan change and a new mortgage amount is derived. This new mortgage will be paid with principal plus interest payments for the remaining number of years.

Some online lenders offer the lowest interest rate in the market so choose mortgage interest rate or mortgage refinancing options that best match your situation while saving time and money.

4 Best Ways to Fund Your Business

Are looking for funding for your new business venture? There are so many people who are thinking that they know better and carry on their dream but spend years wasting time on a business that will never succeed. However if business investors liked the idea but just didn’t think it was investable because of the return on their investment wouldn’t be worth their while, you should still keep looking for the funding and keep your business dream alive.

Funding a business is a very important part of a new business startup up. There are plenty of options open to you; you just need to know what to look for. Most people turn to their bank first and try to get a bank loan. Other businesses (Asia) who prefer instant cash loans than the longer process usually to get urgent funds from legit money lenders in Singapore.

Bank loans can appear attractive as you don’t have to sacrifice any ownership of the business however their interest rates can be high and you might spend a long time paying the debt off. Plus with a bank loan, you will have to pay it back even if the business fails.

Another option available to you is equity finance which is where you sell partial ownership in exchange for cash. This can be in the form of a business angel or a venture capitalist. With business angels, you get the added advantage of advice and support from your investor. Angel investors tend to be very successful in their own right and have similar businesses to you. They often save struggling businesses from ruin and set them back on the right track.

Venture capitalists investors are another type of debt financing. Sometimes these types of investors become partners within the business and use their skill and experience to turn the business around or help it off the ground.

Most of them take an active role but some simply provide the funds and let you run the business yourself. If the business succeeds they typically make a larger return on their investment than for instance interest rates on savings accounts. This is why venture capitalists’ look for businesses to invest their money in. Equity financing is far more expensive if your company is successful but far less if it fails.

Business grants are another option available to you and they could be just the type of funding you need. Grants are sums of money that are given to business and do not need to be paid back. However grants generally come with terms and conditions which must be met to ensure you don’t have to pay the grant back.

Most grants are given to limited companies, partnerships, and sole traders. Unfortunately, the location of your business will be crucial with regards to obtaining a grant.

Finding funding couldn’t be easier with the internet. There are lots of business angel companies which offer the chance to meet with investors. Some online sites have members’ areas where those looking for finance can post their business funding needs. Investors also can become members and look through all the investment opportunities and chose who and which company they wish to invest their money with.