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How to Fix your Credit to Purchase a Home?

A poor credit history can be a major hindrance in the process of purchasing a home. However, the credit report and adequate credit score plays a crucial role in determining whether the home loan would be granted or rejected. The reason behind this is that the credit report provides particulars about the economic or financial history of the debt payers. Therefore, if the credit report is not good enough or does not look favorable, it can be quite difficult to acquire a home loan.

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The home loan consultant in Delhi suggests that before you proceed with the home shopping, you need to analyse the credit report and manage it in a way that it facilitates home loan. An increase in the credit score and upgradation of your credit report might take about few months to even a year. But, it will surely increase the chances of you moving to your dream house.

Low credit score

As you apply for a home loan, you will be charged a much higher interest rate if the credit score is low. In the present scenario, almost every mortgage company now has distinctive programs designed to help those with bad credit receive loans for the purpose of home purchase. One might also be required to pay a higher down payment of cash as a result of low score.  In the low score situation, there exists a probability of loan being repudiated as well.

Low Credit Score Image

Ways to Fix your Credit to Buy a Home

  • If you are working to improve your credit in order to buy a home, it is important that receive a copy of your credit reports from the respective credit reporting agencies. There are only a few creditors who send information to all the agencies. If the mortgage lender pulls your report to check your credit history, they will use the middle score obtained from the different agencies to decide whether or not to qualify you for a loan.

  • You need to collect information on the report and verify that everything is correct such as the name, address etc. You might notice errors on the credit report, which could be responsible for bringing down the credit score. These errors could be due to various reasons which need to be carefully observed and resolved.

  • The improvement of the credit report essentially requires altercation of letters through the certified mail. You may seek the support of a trustworthy credit repair agency in case you cannot invest too much time on it. The expert professionals of such agencies can very well manage the financial repair work of this nature.

  • Once all the disputed aspects are eliminated from the credit report, you can request the credit bureau to mail you the rectified copy.

  • It needs to be noted that there is no easy and instant way to repair the credit report. Therefore, keeping patience with the process is imperative.

  • It is possible to get a pre-approval for a home loan. But, firstly, you must get your credit card report clean, pay off all the unsettled debts and try to enhance your credit score to the extent it is possible. Once you are through all these essential process, you can avail a pre-approval certificate from the mortgage lender or broker.

Conclusion:-

If each and every concerned aspect is worked out well as you apply for the loan, you need to be cautious about not complicating the other things. Do not invest on any other expensive thing in that period. Since, it can damage the entire loan process. In order to be on the safer side, avoid applying for any other loan in such a situation. Or else, you could lose out on the house you wish to purchase.

What is the Difference Between Cash Credit and Overdraft?

Business Organizations require the movement of funds for their smooth functioning and in order to meet the entire financial requirement. Individuals have now resorted to short term loan facilities that are cash credit and overdraft facility. Both are credit facilities that are pertaining to credit with a lender. The words credit and over indicate that you can withdraw more funds than usual capacity. Overdraft and cash Credit account is generally considered more or less similar, but yet some differences suffice.

Here are some of the differences highlighted:

Cash Credit limit facility holds a certain bar, the borrower is allowed to appropriate a fixed sum of money, whereas in Overdraft Facility the customer is allowed to debt only to a specified limit. The loan is made with the current account. This clarifies one important aspect of Cash Credit an Overdraft facility that they are mid-term loan and short term loan respectively.

The loan amount in case of Cash Credit is withdrawn all at once or when it is required, whereas in Overdraft the borrower is allowed to draw and repay multiple times, with the clause that the amount is never drawn over the limit defined. When we consider Cash Credit, the borrower isn’t required to withdraw the whole sum of money all at once; instead he has the liberty to withdraw as and when required. An overdraft can only be withdrawn in circumstances where the borrower requires lending more money than available in the account.

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Cash Credit is offered against speculation of goods, on the other hand, Overdraft Facility is offered against securities. For current account holders there exists a limit for the overdraft amount which is agreed upon, whereas, cash credit is borrowed for only a certain limit which is based on the need of the customer. The cash credit is broadly divided into 2 subcategories, Key Cash credit, and Open Cash Credit. Key Cash Credit is the facility in which the borrower keeps the goods in possession of the lender. The key to the room with the products is handed over to the borrower, hence the name. Open Cash Credit facility doesn’t require the borrower to hand over any product to the lender. The overdraft facility is divided into two types, i.e. Secured and Clean Overdraft. In overdraft facility for business some security is involved, this is called secure overdraft whereas the one with no security involved is called clean overdraft.

Important points to keep in mind while opting for CC or OD facility.

    • Processing fees– The bank usually charges a fixed amount which is about .5% to .75%.

 

    • Interest Rate- The rate is higher the generally fixed loans, for instance, LAP, hence, if you don’t have extra bucks to spare then you must go for LAP.

 

    • Account shutting charge- Some banks impose charges on the CC and OD account if not used up to a certain limit.

 

    • Minimum usage clause- Some banks charge you for not using CC or OD account. For instance, for an OD account of 10 Lakhs with an average use of less than 30%, INR 3 lakh is levied.

 

    • Interest Servicing- Some customers are required to deposit the interest in cash or Cheque deposit.

 

An entrepreneur who wishes to set up his dream business is compelled to take a loan. You can either go for long term funding like LAP or go for flexible funding like Cash Credit and Overdraft. Funding for the long term is generally carried out at a lower interest rate whereas the flexibility funding provides the opportunity of saving some extra funds and thereby paying an interest amount for only the particular amount required.

All You Need to Know About Industrial Property Loan?

An industrial property purchase loan opts when one wishes to buy an industrial building which is ready to move-in. The loan amount is agreed upon by the bank. There are some parameters that are checked and assessed before agreeing upon the amount, they are, the income of the borrower, purchase value, the present market value of the property. The purchased property must comply with all the rules and regulations legally as well as technically.

Industrial Loan Image

The prominent factors that need to be assessed are ‘Loan to Value ratio’ and the ‘income eligibility’. Loan to Value (LTV) ratio is expressed in percentage and is essentially the ratio of the loan amount required to the property’s market value. When considering Industrial Property loan this ratio normally ranges from 50% to 60%. The LTV depends upon the property type and the ultimate use of it.

Income Eligibility is another crucial point to be considered. The main focus of this parameter is deciding and agreeing upon a fixed loan amount that can be extended to the lender, based on his income. There exist particular eligibility calculators that can help ease this hefty calculation task.

The rate of interest in industrial property loan is higher than other secured loans. The floating term is also variable rate.  The margin decided at the time of the loan is agreed upon and made constant through the whole loan term.

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The amount of loan is repaid with the help of EMI (Equated Monthly Installment). Equated suggests that the fixed amount is paid for the entire term of the loan. The interest and principal amount are both encompassed in the EMI amount. Depending on the duration of the loan, the amount varies. An EMI calculator helps find the fixed and defined monthly installment amount that you must pay.

In case, your property is owned by multiple people, then it is mandatory to keep them all as co-borrowers on the loan. Co-applicants are added to increase the income eligibility, and also in case, the property is on a co-ownership basis. Some banks offer you the provision to pre-pay the amount of loan at any stage. There are different percentages defined for the banks on the same lines. There are benefits of utilizing Industrial Loans:

  • Manufacturer looks out for business expansion; it involves a large amount of capital being invested. To meet the capital demand one can opt for a loan against industrial property as this will allow you to lend money.

  • Consolidation – The heavy EMI from previous loans that you had opted for in the past must be sucking up liquidity from the business. Banks offer Loan against the property at a comparatively lower price hence, one can opt this.

  • There may occur a time when the expenditure gets out of hand, or some new ones arise which you were not prepared for. These can be taken care of with borrowing money from the bank on behalf of the property you own.

  • Industries are ever so evolving with introducing new and advanced technologies every now and then. Reduction in operating expense and increment in the production is both aided and upheld by the loan variant. You can opt for a loan against an industrial property when you wish to upgrade your place of work.

If you are an entrepreneur who runs a company on his own expense might find the industrial property loan arrangement worth trying to meet the financial requirements of the company. Loan against industrial property or industrial property loan is a beneficial loan type. For instant upgrades, acknowledging heavy unintended expenses, and catering to all the other requirements of capital, utilizing loan against property is the right thing to do.

About Bad Credit Home Loans – What You Need to Know in 2019?

If your credit is low and you are willing to make a home purchase, perhaps you might be really worried about availing loan. However, there exists a possibility to receive home loan even with a bad credit. Though, a poor credit history can make the entire process slightly difficult. Therefore, it becomes essential to put efforts towards increasing the credit.

How to apply for a home loan with a Bad Credit?

Here mentioned are few tips that can facilitate Home Loan with poor credit:-

Bad Home Loan Image

    • A larger down payment- Saving and contributing towards a down payment will be really helpful in paving a path, towards helping you get approval for home loan such as lal dora home loan. It makes your lender acknowledge and trust your ability to contribute money towards the loan. You may save for the down payment by cutting down the insignificant expenses, trying to generate more sources of income etc. You might even seek the help of friends and relatives who are willing to help you with the finances.

    • Speak to your credit counselor- It can be one of the best ways to go about in your endeavor towards availing home loan on lal dora property or any other property. The Credit Counselor’s might review and analyze the particulars of your monetary situations. Accordingly, provide appropriate advice with anything related to the loans especially in the context of bad credit. However, you need to keep in mind that it is not necessary that all the counselors dealing with bad credit are skilled and aware in the same capacity. Therefore, you must be careful in choosing the apt one to guide you in the right direction. There are several counseling agencies specially dealing with such services.

    • Payment of down debt and lower DTI- The lenders will meticulously observe your debt-to-income ratio (DTI) while determining whether the loan should be sanctioned or not. It is calculated with a mathematical procedure which includes dividing the complete debt with the gross monthly income. If your debt-to-income ratio is higher than you need to have, you must take essential steps to improve it. This can be done effectively by increasing your income and paying down on the debts.

    • Emphasize on track record of on-time payments- It is suggested to wait for few months before applying for a mortgage in the events of a record of delay in payments. This would play a vital role in reducing it’s impact. In that gap, you must try to have a record of payments done on time.

Home loan after foreclosure

If there has been a foreclosure, the waiting period might increase further. At times, it can take months or even years to end. However, if the reason behind such foreclosures were severe medical conditions or loss of job and financial crunch as a result of it, certain exceptional rules would be applicable, thus, helping you avail loan.

Is refinancing a Bad Credit Home Loan possible?

Bad Credit Home Loan Image

The main purpose behind refinancing the mortgages could be availing a lower interest rate which can be affected by the bad credit. In such a situation, you must get in touch with the Lender to better your credit; to the extent it is possible.

Conclusion:-

From the overall analysis, it can be concluded that though getting loans with bad credit might be slightly challenging and a time consuming procedure. However, there are positive chances to avail it.  All you need to do is to search for the right Loan Service Provider Company which would guide and assist you through the entire process, right from applying for the home loan to successfully purchasing your house.

How Overdraft Facility is Helpful For Business?

An Overdraft is a financial tool which is a line of credit provided by the banks to the individual and business entities. These facilities provide Businesses and Individuals access to funds beyond your available credit funds, ensuring that you are well covered for emergency expenses and other short term cash flow issues. In the current financial scenario, banks grant this facility to the customer’s savings account as well.

It is a type of credit facility whereas bank loan is a facility for borrowing a certain fixed amount of money. Using such facility, a user can withdraw cash as and when he requires up to the amount he needs. However, in bank loans, a fixed amount is given to the user irrespective of his financial requirement. The interest charged on the overdraft facility is only limited to the amount of money withdrawn.  While in case of the bank loan, interest is charged on the amount sanctioned by the bank. An operational account is essential to use such financial facility, unlike the bank loan.

Business Overdraft:-

overdraft loan facility

There can be multiple applications of Business Overdraft such as paying salary to the employees, managing or settling the invoices, buying stock and meeting other essential expenses.

The fees associated with bank overdraft are distinct from one bank to other bank.

These are the charges that may be applicable on overdraft:-

  • Interest: It is calculated as a percentage of the amount that is overdrawn.

  • Daily Fees: Certain types of banks may charge a daily fee on the amount that is overdrawn till the time it is repaid to the bank. However, there are alternatives to this such as there might be a weekly fee or a monthly fee. Generally, these fees are charged on the amount overdrawn.

  • Fixed Setup Fee: For initiating the overdraft facility, the banks might also charge a fixed setup fee.

Advantages of Overdraft facility for business

overdraft facility for business

  • It acts as safety net: Since you would only require to pay interest on the money you actually overdraw, therefore, it could serve as a comparatively low cost safety net that you don’t even need to use.

  • It has flexibility in terms of limits: It would enable you to communicate to the lender about the period you would like the business overdraft to be accessible for. There is a possibility that you may even be able to get it renewed according to your preference. You can close it any time you wish to but you will have to pay the outstanding balance or fees, in such a situation.

  • Provides cash flow: When you are lacking in sufficient funds and need to meet the expenses, you can fund a wide range of business entities with the help of Business Overdraft facility. So, it keeps all your financial worries aside in a difficult financial position.

  • Can be used as security: Both the secured and unsecured business overdrafts can be provided by the Lenders. However, a major advantage of a secured overdraft is that one may need to pay only a minimal interest rate in exchange for offering asset or property as security. In the case of unsecured loan, a higher interest rate would be charged. Therefore, it is better to go for the secured overdraft facility, considering it involves lower interest rate.

Conclusion:-

overdraft loan facility

By analysing the various benefits attached to the Overdraft facility, it can be comprehended that opting for Overdraft facility for business, to meet an important financial need in any urgent or crisis situation would be of immense help. However, it should be considered only if it seems a viable option for a particular financial business need.