Taking a loan creates a complex relationship between the lender (originator) and the borrower - contractor. There can be many and different reasons for a man to lend money. Perhaps he wants to start new business or expand the production or he just wants to climb the property ladder or release capital to pay off commitments or just treat himself to a new car.
There is a really long way that the contractor has to pass. First he must think over if the aim costs the risk. He must assess all the positive expectations, the possibilities that he will achieve his aim and on the other hand the risk if he won't achieve it. Then when his idea clears up he must think about the financial part. This includes how much money is needed. Here comes the part when the contractor has to choose the lender - financial institution, which is usually a bank. It takes a long time to gather information about different programs from each loan. There are independent financial advisers that can advise you on and arrange a suitable mortgage from all the lenders and from all of their product range.
Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably
Mortgages for contractors, freelancers and professionals are a challenge. A challenge because they have to prove their ability to pay the loan, which includes the principal, the interest, property insurance and the fees, due to the bank for managing the credit. The lender knows that freelancers have a good record of paying their financial commitments but have and began distrust way that they work. When assessing for a mortgage they will too often resort to your accounts that will never reflect what you truly earn. They are also confused by the concept of umbrellas, composites and managed solutions and for too long contractors have been forced down the self-certification mortgage route with the extra costs and higher repayments that this entails.
When taking mortgage, the contractor or the freelancer has to be careful in three points.
First, he must know that there is possibility not to pick up all the money in the day the loan is taken. For example the contractor wants $10,000. The bank approves him and he can obtain the whole sum on 1st, August. Here it is important to know that if he wants he can take a part of the sum and the other later. In that case he will pay the interest only for the money he has taken and a very small size of interest (for keeping) for the rest of the money. It's important to know the period, which is different for the different lenders, for keeping money.
Second it is very often that one lender gives lower interest but higher fees, so it's important to see at the end where the contractor will pay less.
Lastly, mortgage loans are generally structured as long-term loans, the periodic payments for which are similar to an annuity and calculated according to the time of value of money formula. The repayment plan is the most important part of the whole process.
The development of the trade and industry, the will to go forward, to live better, often faces us with the necessity of having more money in a definite moment. Taking loans is one of the ways to resolve the problem of not having enough money, but you decide whether the risk is worth it.
Sue Mitchell An Expert On Corporate Gifts, having a large number of articles published on various well reputed internet sites. Check out for Her articles about contractor mortgages
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