What Options are There if you Need Money Fast for Your Business?

 

A number of businesses can find themselves in a position where they need money fast. Whether it is to pay for bills, rent, staff or clear any outstanding debts, businesses of all sizes can sometimes need a quick cash injection to help see them through a difficult period. In fact, cash flow issues is one of the most common reasons for startups to fail or for businesses to go under. Below, we list a number of effective ways for businesses to get money fast:

 

  • Borrow money from family and friends
  • Bank loans
  • Bridging finance
  • Borrowing against a vehicle
  • Overdrafts
  • Crowdfunding
  • Venture capital and business angels

 

Borrow money from friends and family

One of the easiest ways to fund your business in the early stages is to ask any willing friends or family members to invest in your business. This should only ever be a short-term option and is usually used in the initial stages when a business needs to prove that its concept has potential and can then go on to seek further funding.

Borrowing money from friends and family can be a much quicker way of building funds than going through an official loan approval process and you negate the need for eligibility criteria and other entry barriers. Not only that, you will likely have far more flexible terms when it comes to interest rates and length of loan term. Depending on the terms you agree with your friends and family, the interest could also work out to be a good investment for them in the long term. However, if anything goes wrong you risk damaging your personal relationships.

 

Bank loans

Traditional bank loans have a lot of merit as a way of funding money for businesses looking to get started. There is a wealth of different loans on the market which could fund your business and match your financial needs. If you already have a business bank account open, this could be a good starting point to approach your bank and present your business proposal in order to be approved for a business loan. Typically, banks will only offer loans to those with a good credit score and credit history.

If you choose to take out a bank loan for your business, you can usually shop around for the msot competitive rates and choose from a range of different loan products to make sure that you are getting the most suitable loan for your needs. Generally speaking, teh better your credit score, the better your chances of approval and the more competitive interest rates you will be offered. Also, there will be a clear repayment plan. One of the best things about a bank loan is that you will not have to revoke any control of your business.

However, if you are looking for quick funds, bank loans may not be the best option for you. Seeking finance from banks can often be very time-consuming and requires a lot of paperwork and back and forth.

 

Bridging finance

Bridging finance is what we specialist in here at Octagon Capital. Essentially you can raise money for a tight deadline, using a property as security. With a bridging loan, it is designed to 'bridge the gap' between the purchase and sale of something, so it can be useful if you know that you are going to be selling your premises or completing on a big deal and just need some cash quickly to help move things along.

You will need a valuable asset as security - so whilst this is usually property such as offices, premises, hotels or agricultural land, it could also be vehicles. In fact, a German airline Condor, borrowed a huge sum of money through bridging finance by securing it against their airlines.

 

Consider-bridging-loans

Bridging is used to bridge the gap between the purchase and sale of something. It is usually available within a matter of weeks and is often paid back after just a few months.

 

Borrowing against a vehicle

Borrowing against vehicles is a very quick and popular way to raise money fast. Known as secured loans against your car, bike or van, this could be a general secured loan for your business or it could be an individual logbook loan.

It is not uncommon for business founders to get a logbook loan against their own vehicle and then provide a director's loan to the business. In this instance, you temporarily handover the logbook of your vehicle to the lender who can give you up to 50% of the car's value upfront, with pretty low rates too. The key thing to remember with secured loans is that if you struggle to repay, your vehicle can be repossessed by the lender to cover their losses.

 

Overdrafts

Overdrafts from your current account or credit card are there for a reason, to help in the event of an emergency.

With some personal or business credit cards, you will have an authorised or unauthorised facility so that you can borrow an extra few hundred or thousand pounds if you need it.

However, it is important to note that overdrafts, especially when unauthorised can be some of the most expensive form of borrowing on the planet and you should try use this for as little time as possible. Find out more information about overdraft charges here.

 

Crowdfunding

Crowdfunding has become a buzzword in the business world when it comes to raising funds. There are different platforms available, all of which involve raising money from multiple individual investors (including regular people who may be interested in your business proposal). This option is probably only suitable for businesses who are offering a proposal which appeals to multiple people and offers a key solution or USP. It will need to be able to attract a lot of attention in a short period of time in order to rack up the funds in a timely manner so may not be the fastest option available.

 

Venture capitalists and business angels

If you have a business proposal with real potential, you might be able to approach venture capitalists or business angels directly for funding. 

Business angels are individuals who have personal wealth and seek investment opportunities. They will fund your company if they see potential and, in exchange, they will want a share of your business. This can be a great way of receiving large amounts of money relatively quickly as well as receiving professional guidance. However, you will need to relinquish some control over your business.

For the chance to receive even more investment, you could approach a venture capitalist. They work similarly to angel investors in that they provide money in exchange for equity in the business. Their goal tends to be for the business to grow quickly so that they can benefit from a return on their investment within a short period of time. 

The only issue is that when you are approaching VCs and business angels that the process can take a little long. After all, you will have to find the right companies or individuals, pitch to them and await a response - and any attempt to raise money will usually be subject to strong business proposals, forecasting and planning, which is going to be longer than just applying for a loan on a website.

 


What-Mortgage-Can-I-Afford

How Much Mortgage Can I Afford?

Affordability of a mortgage will be determined based on many different factors, and will vary across borrowers. In general, it is calculated based on monthly outgoings and income. Different aspects of a mortgage, such as interest rates and repayment period, will also impact the affordability of a mortgage.

 

What Is a Mortgage?

A mortgage is an agreement between borrowers and lenders in which a property is used as a guarantee for a loan to get money. When the mortgage transaction is made, borrowers receive money and promise to repay the loan. The lender will receive money paid back over time plus interest.

 

What-Is-a-Mortgage

 

Mortgages can come from banks or other financial institutions and can be used not only to buy a house but also for refinancing existing properties.

 

What Mortgage Payment Can I Afford?

To determine what mortgage payment you can afford, lenders typically take into account different factors, including the following:

  • Income
  • Any monthly debts
  • The amount of savings available for a down payment.

In addition to these factors, you should consider any unexpected costs that may arise and which could negatively impact your savings.

Experts recommend having three months of payments, including enough to cover your housing payments and other monthly debts, in savings which can act as a buffer in case of unexpected costs.

 

What Amount of Mortgage Can I Afford Based on My Salary?

Typically, mortgages are calculated based on around four times your annual income. However, it will also depend on your income source. For example, if your income is purely made up of your salary, you are more likely to get a mortgage than someone whose income source is a combination of benefits and their salary.

Salary is an important component of the mortgage equation but it will not be considered in isolation. Lenders will also look at the amount of debt an individual has and the value they are able to put as a down payment.

 

Mortgage-Based-on-Salary

 

The majority of lenders will look at a person’s salary relative to the amount of debts they owe. This is what is known as the “debt-to-income” ratio. Debt-to-income ratios allow a lender to assess how affordable mortgage repayments are for a borrower.
If a person has lots of debt, they will have a greater load of monthly outgoing payments that they will be expected to make. This means that people who have a poorer debt-to-income ratio may struggle to be approved for a loan or may incur higher interest rates or additional fees.

Employment history, in addition to salary, also plays an important part. Practically all lenders will require proof of employment with many specifying a minimum of two years of past employment. Those without an employer, such as self-employed individuals, will need to demonstrate proof of income and may find it more difficult to be approved for a mortgage.

 

How Does Credit Score Impact Affordability?

A credit score is what lenders used to determine whether the borrower is a good candidate for a loan. The score is based on spending history, including any borrowing behaviour, and can see whether an individual makes repayments on time and their amount of debt. The higher the credit score, the better someone is as a candidate for a loan.

Individuals with higher credit scores are more likely to be approved for a loan as they demonstrate that they can meet payments and are careful with money. This may also mean that they qualify for better loan terms including better interest rates and fewer fees.

It is still possible to get a mortgage if you have a poor credit score, however it is usually more difficult and the terms tend to be less favourable.

 

How Does Down Payment Amount Impact Affordability?

A bigger down payment may save the borrower a lot of money in the long term. Borrowers will always need to put down some form of down payment when procuring a mortgage in order to protect the lender.

 

Down-Payment-Impacts-Affordability

 

Although the standard down payment for a mortgage is 20% of the property’s value with 80% funded by the lender, it will vary between lenders. If a borrower is in the lucky position of providing a greater down payment, this can benefit both the lender and the borrower. Not only does it provide greater protection for the lenders, it means that the borrower will be able to save money in the long term due to increased equity in the property and not needing to pay mortgage insurance premiums.

 


Is-Permanent-Job-Required-for-Mortgage

Do You Need a Permanent Job To Get a Mortgage?

In order to get a mortgage, you will need to demonstrate that you have sufficient funds to meet mortgage repayments. This can be more difficult without a permanent job but it is not impossible.

 

How Can You Get a Mortgage Without a Permanent Job?

It can be difficult to secure a mortgage without a permanent job; however, the mentality surrounding what constitutes a “permanent job” is changing, with more freelance roles than ever before. Mortgage lenders are following suit and many are starting to change what they accept as proof of income.

As with any loan, the factor that mortgage lenders are most concerned with is whether or not you can demonstrate income stability. Regardless of what your job situation is, you should be able to provide evidence to a lender that you have a fairly stable income source and have had that same source for a minimum of two years.

Part-time employment, self-employment and freelance jobs could all be acceptable forms of income source as long as you are able to demonstrate employment history and sufficient income to meet mortgage obligations.

 

Can You Get a Mortgage if You Are Unemployed?

Taking out a mortgage if you are not currently in permanent employment can be an uphill battle. Lenders invariably look at a borrower’s income or annual salary in order to assess how much money they are willing to loan.

 

 

However, some mortgage providers are more flexible than others in how they define “income” and it may not mean a permanent job. In this scenario, lenders may accept freelance income, self-employment payment stubs, savings accounts or even benefits as long as you can prove that your monthly income is sufficient to meet payments.

If you are fully unemployed, it is far more difficult to be approved for a mortgage, especially if you do not have good credit history and cannot provide a high down-payment. No-income loans, including mortgages, usually incur far higher interest rates and typically permit you to borrow less money.

 

Is It Possible To Get a Mortgage When on Universal Credit?

Applying for a mortgage whilst you are on Universal Credit is not a good idea as, although some lenders will accept this as a form of income, it is far more difficult to secure a mortgage under these conditions. However, if you are on Universal Credit with a pre-existing mortgage, you may be able to get assistance with mortgage payments but only if you have been claiming it for more than 39 weeks consistently.

 

How Can You Qualify for a Mortgage if You Do Not Have a Permanent Job?

Those who are applying for a mortgage whilst not in permanent employment will need to demonstrate some source of regular income which could include savings. Lenders will most likely also require good credit history. Regardless of your job situation, be it voluntary or involuntary unemployment, part-time employment, freelance or self-employed, you will need to prove to any lender that you can make regular payments on time.

 

 

One way that you may be able to qualify for a mortgage whilst unemployed is by having a co-signer which could be a trusted relative, spouse or friend. The chosen co-signer will need to be employed or have a high net worth. The presence of co-signers means that the mortgage is less risky for the lender as they are securing the loan with their income and credit history.

 

Is It Possible To Get a Mortgage Whilst on Benefits?

If you are currently receiving benefits for unemployment, it is highly improbable that your lender can use this as evidence to qualify for a home loan. Often, lenders require you to prove a minimum of two years of income from a reliable source.

However, if you are receiving benefits you may still be able to get a mortgage under the right circumstances. This will depend on many variables including credit history and alternative sources of income.

If you have a regular source of income, assets or savings, in addition to the money you are receiving through benefits, you are more likely to have your application approved.

For lenders, their biggest concern is whether or not a borrower is able to meet their monthly mortgage obligations. Thus, if the benefits are sufficient to meet payments, and borrowers can demonstrate an otherwise satisfactory financial profile, lenders may indeed approve the mortgage.

Before putting in a loan application, you should check whether the lender accepts benefits as a valid source of income as an unsuccessful application could negatively impact your credit score. Working with a mortgage advisor could help you find a lender who is best suited to your personal circumstances.

 

How Can I Demonstrate Mortgage Eligibility if I Don’t Have a Job?

In order to take out a loan when you are unemployed, you will still need to demonstrate how you will be able to meet repayments and show lenders that you have a solid credit history.

 

Calculating-credit

 

If you are not able to prove full-time employment, you will most likely need to share the following information:

  • Any missed utility bill payments
  • Current available credit
  • If you have previously been declined for loans and how many times
  • Whether you are on the electoral roll

Lenders will only accept mortgage applications from unemployed individuals if they can assure that you are able to meet your mortgage payments. If you can show that you are able to make timely payments and can responsibly manage outgoing payments, you will be more likely to be approved for a mortgage.

 


Full-Time-Job-for-Mortgage

Do You Need a Full-Time Job To Get a Mortgage?

It is possible to get a mortgage without a full-time job but you will need to demonstrate to any mortgage providers that you can afford mortgage repayment with the income that you have.

 

Can You Get a Mortgage if You Are Unemployed?

If you are looking to take out a mortgage, and are not currently in full-time employment, it may prove difficult. Lenders typically look at a borrower’s income or annual salary in order to assess how much money they are willing to loan.

 

Unemployed-person-looking-for-job

 

However, some mortgage providers are more flexible than others in how they define “income” and it may not mean a full-time job. If this is the case, these lenders may accept freelance income, savings accounts or even benefits as long as you can prove that your monthly income is sufficient to meet payments.

If you are unemployed, you might find it very difficult to secure a mortgage without an exemplary credit history and the ability to offer a high down-payment. Beware of no-income mortgages which may come with much higher interest rates and reduced borrowing power.

 

Is It Possible To Get a Mortgage When on Universal Credit?

It may be difficult to secure a mortgage on Universal Credit. However, if you are on Universal Credit with a pre-existing mortgage, you may be able to get assistance with mortgage payments but only if you have been claiming it for more than 39 weeks consistently.

 

How Can You Qualify for a Mortgage if You Do Not Have a Full-Time Job?

If you are applying for a mortgage and cannot prove employment, you will need to be able to demonstrate some source of regular income which could include savings. Lenders will also require a good credit history. Regardless of whether you are unemployed by choice, such as taking retirement, or have lost your job, you will need to prove to any lender that you can make regular payments on time.

 

Qualifying-for-Mortgage

 

One way that you may be able to qualify for a mortgage whilst unemployed is by having a co-signer; this might be a relative, spouse or friend. This co-signer will need to be employed or have a high net worth. Co-signers make the mortgage less of a risk for the lender as they are securing the loan with their income and credit history.

 

Is It Possible To Get a Mortgage on Benefits?

If you are currently receiving benefits, it is unlikely that your lender can use your unemployment income in order to qualify for a home loan. More often than not, lenders require you to prove a minimum of two years of income from a reliable source.

However, if you are receiving benefits it may still be possible to get a mortgage under the right circumstances. This will be contingent on many variables including credit history and alternative sources of income.

If you have a regular source of income, assets or savings, in addition to the money you are receiving through benefits, you are more likely to have your application approved.

For lenders, their biggest concern is whether or not a borrower is able to meet their monthly mortgage obligations. Thus, if the benefits are sufficient to meet payments, and borrowers can demonstrate an otherwise satisfactory financial profile, lenders may indeed approve the mortgage.

Before putting in a loan application, you should check whether the lender accepts benefits as a valid source of income as an unsuccessful application could negatively impact your credit score. Working with a mortgage advisor could help you find the right lender and best deal for your personal circumstances.

 

Alternatives to Full-Time Employment

In today’s working landscape, mortgage providers tend to be more flexible about what they define as full-time employment. With self-employment, freelancing and the gig economy becoming more prevalent across the UK, there are more options available when demonstrating your income.

 

Self-employed-person-working

 

The most important thing that lenders want to see is income stability. Whether or not you have a regular employer, your objective should be to demonstrate that you have a fairly stable income and that this has been consistent for at least two years. Whether you have a part-time job, a freelance stint or are working from gig to gig, lenders will want to see that you can demonstrate employment history and enough income to meet mortgage repayments.

 

How Can I Demonstrate Eligibility for a Mortgage if I Have No Job?

In order to take out a loan when you are unemployed, you will still need to demonstrate how you will be able to meet repayments and show lenders that you have a solid credit history.

If you are unable to prove employment, you will most likely need to share the following information:

  • If you have missed any utility bill payments
  • How much credit you currently have available
  • If you have previously been declined for loans and how many times
  • If you are on the electoral roll

Lenders will only accept mortgage applications for the unemployed if they can be sure that you are able to meet monthly repayments. Demonstrating that you are able to make payments on time and can manage debt in a responsible manner will make you more likely to qualify for a loan.

 


Getting-mortgage-on-benefits

Can I Get A Mortgage On Benefits?

Those on benefits may find it more difficult to get a loan, but there are still various options available if they are in need of funds.

 

Is It Possible To Get a Mortgage on Benefits?

If you are receiving benefits it is still possible to get a mortgage under the right circumstances. This will depend on many different factors including credit history and alternative sources of income.

 

Mortgage-application

 

You are more likely to have your mortgage application approved if you have a regular source of income or assets in addition to the money you are receiving through benefits.

The biggest concern for lenders is proving that a borrower is financially stable enough to meet the mortgage payments. For that reason, many lenders have no problem accepting benefits as a source of income as long as their monthly income is sufficient to meet payment obligations.

It should be noted that not all lenders will accept benefits so it is worth doing your homework before putting in a loan application. If the majority of your income is made up of benefits, it may be worth seeking a specialist mortgage lender.

 

Which Benefits Are Accepted by Mortgage Lenders?

Not all benefits will be accepted by lenders and eligibility may vary between lenders. Here are just some of the benefits that mortgage lenders tend to accept:

  • Attendance Allowance benefit
  • Carer’s Allowance benefit
  • Child’s benefit
  • Disability Living Allowance (DLA)
  • Maternity Allowance benefit
  • Pension Credit benefit
  • Widow’s Pension benefit
  • Working tax credit benefit

Within this, lenders may accept certain benefits but only as a proportion of income rather than as the full amount of proof of income. Certain lenders may have additional specific criteria that you will need to meet before they accept your benefit.

 

Can You Get a Mortgage When on Universal Credit?

You can often get assistance with mortgage payments if you are on Universal Credit but only if you have been claiming it for more than 39 weeks with no breaks and no evidence of earned income within that time.

You will not be eligible for help with mortgage payments on your home if you have received earned income at any point.

 

Can You Get a Mortgage if You Are Unemployed?

It is possible to apply for a mortgage without an income or a full-time job. However, this will limit the amount of mortgage lenders available to you. The majority of lenders usually ask for a minimum income per month.

 

Unemployed-making-application

 

That being said, some mortgage providers recognise benefits as a source of income. If that is the case, your lender may approve you for a mortgage while you are on benefits as long as your monthly income is sufficient.

More traditional lenders may only value full-time employment as a source of income and means of proving the affordability of the mortgage.

 

Which Mortgage Providers Accept Benefits?

Many mortgage providers across the country accept benefits as a valid source of income. However, the list is constantly changing and you should always check first. Working with a mortgage advisor can help find the best mortgage deal to suit your personal needs.

The following banks are among some of those offering mortgages to individuals on benefits:

The mortgage lenders that accept benefits include:

  • Abbey
  • BM solutions
  • Co-operative Bank
  • Darlington Building Soc.
  • First Direct
  • Halifax
  • HSBC
  • Leeds Building Soc.
  • Manchester Building Soc.
  • Mortgage Trust
  • Nationwide Building Soc.
  • Natwest
  • Santander
  • Scottish Widows Bank
  • TBMC
  • The Mortgage Works
  • TSB
  • Virgin Money

 

Is It More Difficult To Get a Mortgage on Benefits?

It is generally harder to get a mortgage if you are receiving benefits, especially if these benefits make up most of your income. This is because you will need to demonstrate to the lender that you are able to reliably meet payments.

 

Unemployed-with-mortgage

 

However, if you have a good credit rating and can show that your monthly income is greater than your monthly outgoing payments, this will all support your case and show you to be a reliable borrower.

Claiming benefits will not affect your credit score so from that point of view it will not affect your mortgage application or applying for any future loans. Although, if you are claiming benefits, this is likely due to low income. So, for that reason, the mortgage becomes more difficult to get.

 


Name-on-title-but-not-mortgage

Can I Be on the Title but Not on the Mortgage?

It is possible to be named on the title deed of a property without being on the mortgage. This means that you are not legally obliged to repay the mortgage but you have the right to ownership of the property.

 

What Does Being on the Title of a House Mean?

A title refers to the real estate title of a property. This is the legal way of expressing who is the rightful owner of a property. Therefore, the person whose name is on the title deed is the legal owner of the property.

 

Get-on-title-of-house-deed

 

Thus, whoever is on the title deed has access to the property and is entitled to make modifications. It also gives this individual (or individuals) the power to transfer the ownership to others.

 

How Can Someone Be on the Title Deed but Not the Mortgage?

It is possible to be named on the title deed of a home without being included on the mortgage. This arrangement means that the individual is an owner of the home but is not liable for the mortgage repayment. However, if the payments are defaulted, the lender can still foreclose on the home.

The person who is officially an owner of the property but does not have an obligation to repay the loan is sometimes referred to as a “non-obliger” or “non-borrower.”

There are many reasons why a couple might choose to do this. For example, applying for a joint mortgage means that lenders will look at combined income but also an aggregated credit score.

In the case that one person from the couple has a bad credit history, poor employment record or outstanding debts, it could ruin their chances of getting a mortgage. However, it would still be possible for their name to be on the deed regardless of whether or not they are contributing to the mortgage.

Even though you can be on the deeds of the home without being on the mortgage, it is worth noting that many mortgage lenders will not agree to this arrangement.

 

Can I Sell a House if My Name Is Not on the Mortgage?

Anyone listed on the property title will have full ownership of the home and thus have full rights to sell the property, regardless of whether or not they are on the mortgage.

 

House-for-sale

 

If You Buy a House as a Couple Under One Name Can Both Spouses Be on the Deed Title?

Even if you choose to buy a house under one name, you can add your spouse to the home’s title after the loan is finalised and become official “co-owners”.

However, the person on the mortgage application will be the sole party responsible for the repayment of the loan.

Listing a spouse as a co-owner on the house title does not signify any legal responsibility for them to assist with the mortgage payments.

 

Can You Add a Name to a House Title?

Yes, you can add names to a house title to allow for joint ownership of a property. Examples of people that are typically added to a house title include:

  • A spouse
  • Your child

 

Adding-spouse-to-house-title

 

However, they will need to have an interest or share in the property. In these cases, it is possible that any existing loans will need to be refinanced or modified.

 

What Rights Do You Have if Your Name Is Not on a Deed?

If multiple people are living in a house and there is only one name on the title deed, the “non-owner” (the party whose name does not appear on the deed) has no legal rights over the property. In this case, it is possible to establish a “beneficial interest”.

 

Is There a Downside to Putting Multiple Names on a Title Deed?

If there are multiple names on the title deed of a home, especially if the names are of those who are not contributing to the mortgage, it assumes risk of ownership as it means the title is not free and clear.

 

Do You Need To Be Married To Be Co-Owners of a House?

You can legally co-own a house with someone even if you are not married. Names can be added to the deed even for people who have not signed the mortgage, as long as the lender agrees. However, taking title of a property as an unmarried partner or friend can sometimes be more complicated than a married couple buying a property together.

 

Wedding-rings

 

If you are not married but purchased the house with a partner who is the sole name on the mortgage, you cannot claim the mortgage deduction on your income taxes, even if you contribute to the payment each month.

 

Can a Name Be Added to the Mortgage?

It is possible to add a person to your mortgage deed, something which is done by contacting the lending company and paying any additional service fees. If someone is added to the mortgage deed and the title deed they will be equally responsible for the repayment of the mortgage and will also have legal rights to the property.

 


Married-Couple-Buying-House

Can a Married Couple Buy a House Under One Name?

Married couples can choose to buy a house under just one name rather than including both spouses on the mortgage. In fact, in certain circumstances it can actually benefits couples to only put down one name in their application.

Here, Octagon Capital explores the ins and outs of only putting one spouse on the mortgage application, including the benefits, disadvantages and important things to look out for in this process.

 

Do You Have To Apply for a Mortgage With Your Spouse?

It is not necessary to include both spouses on the mortgage application if married couples are buying a house or refinancing their current homes.

 

Mortgage-Application-With-Spouse

 

In fact, in some cases it could benefit the couple to only include one spouse on the home loan application. For example, choosing the spouse with the better credit score could make it more likely that the couple will be approved for a mortgage.

 

Benefits of Having One Spouse on the Mortgage

There are many reasons why a married couple may choose to purchase a home using only one spouse’s details, including the following...

  • Avoid credit issues

If one person on a joint application has poor or damaged credit history, it can have a negative impact on the entire mortgage application.

When making a joint application, mortgage lenders create a “merged” credit report using the scores of each applicant; they then use the lowest of the two scores in order to evaluate the application.

This lower score is what determines the offer for the lender meaning that if one spouse has a significantly lower credit score, it could ruin the chances of the couple securing a mortgage.

Low credit score could prevent a couple from qualifying for a loan or could lead to higher interest rates.

Typically, credit scores of lower than 580 will be rejected by the majority of lenders. That means that if one spouse has a score of 580 or lower, the other spouse should consider making the application alone.

  • Save money on mortgage interest rates

If one spouse of the couple has exceptional credit, it could benefit both partners in the long run as it could save thousands on your home loan.

Applying alone can significantly reduce the mortgage cost and the interest rates incurred. However, this strategy will rely on the individual not only having a high credit score but a high income as it is true that the borrower must qualify for the loan without the help of their spouse’s income.

  • Preserve assets

To take out a secured loan, you will typically need to put up collateral in order to mitigate risk for the lender. In many cases, this could be an asset such as your home. This means if you are unable to pay your mortgage, you risk being vulnerable to asset confiscation.
If you buy a house in just your name, you protect your home from creditors in the case that your spouse has outstanding debts such as student loans or unpaid taxes.

  • Simplify estate planning

Having the home in one spouse’s name only means that it simplifies estate planning. This is particularly in the case of second marriages. For example, if you want to leave your house to children from a separate marriage, you can do this more easily without having to deal with the rights of your current spouse.

  • Dividing assets during divorce procedures

In the case of divorce, having two names on a mortgage application can be dangerous territory. Buying in one name only will help the buyer maintain control and manage proceedings more easily.

 

Disadvantages of Buying a House Under One Name

A joint mortgage application may be a good idea for couples in which the spouses have similar credit histories and shared estate planning. In this case, buying a house under one name may not be the best option.

 

Buying-house-under-one-name

 

Only one income: If applying for a mortgage using just one name, only one income can be counted on the application. This will significantly reduce the buying power and mean that fewer properties are available.

A joint application, with two incomes, means that a couple can afford a larger monthly mortgage payment and increase the maximum loan amount they can qualify for. This also means that they have access to more expensive homes than simple applicants.

Higher debt-to-income ratio: Leaving a spouse off the mortgage application could potentially lead to a higher debt-to-income ratio.

In general, the higher your income and the lower your debts, the more likely you are to be able to afford a house.

However, if you are choosing to apply as a single applicant and have high debts, it may be more difficult to meet a lender’s debt-to-income ratio requirements. Or, it may be that they qualify but are not able to receive as high a loan value as they wanted.

 

If You Buy a House Under One Name Can Both Spouses Be on the Deed Title?

Even if you choose to buy a house under one name, you can add your spouse to the home’s title after the loan is finalised and become official “co-owners”. However, the person on the mortgage application will be the sole party responsible for the repayment of the loan.

Listing a spouse as a co-owner on the house title does not signify any legal responsibility for them to assist with the mortgage payments.

 


increase commercial property value

How Best To Increase Your Commercial Property Value

If you’re investing in a commercial property or already have made that investment and are looking for ways to increase the property’s value, then look no further than this handy guide. 

You bought into a commercial property with the idea of turning into a booming business hub, perhaps your investment is right in the heart of downtown — a downtown area that needs something different — something new and exciting. Maybe your commercial property could be the answer. 

Here are a few ways that you can increase the value of your commercial investment.

 

Apply for a zoning change 

Zoning changes are one of the best ways to increase your commercial investment. You can make an application to your municipal office to change the zoning laws that allow for properties to be used for specific purposes. If you’re looking at doing this, pay attention to the trends in your area. 

  • Are there more families moving into the area that could use a renovated apartment building? 
  • What about commercial space? 
  • Is there room in your already-existing commercial property to house more clients? 

Zoning changes are a complicated, sometimes expensive, but ultimately profitable way to raise the value of your commercial property.

 

Go green 

One of the most attractive features of any commercial space, particularly with the current public consciousness, is how ‘green’ the space is. This means how environmentally conscious and how environmentally friendly the space is. 

Investing in green technology for your commercial space is a great way to decrease your overall costs (overtime) and increase the likelihood that it will sell for a higher price when you’re ready to do so. This will also attract particular types of business clientele who enjoy that aspect of the property. 

 

Going residential 

This will require a zoning change, however, one of the best things to do for your commercial property is perhaps to turn part of it into a residential space. Given that there is always a struggle for affordable housing for the senior population, perhaps it’s time to give them that option in your new mixed commercial/residential space. 

Then, you can tailor your commercial clientele to those which would be useful for your senior populous. Consider the things that seniors may struggle with, such as mobility when renovating your commercial space and you could give seniors a forever-home to live out the best days of their lives in. 

 

Make your exterior as appealing as your interior 

There’s nothing worse than seeing a derelict, unkempt commercial space for any would-be customer. Your goal as a commercial investor is to make sure that the businesses within your space make money so you can make money yourself. 

It is critical that those businesses attract new clients through a gorgeous-looking exterior that is warm and welcoming. Make sure that any grass is cut, any trees, and other exterior shrubs and plants are well kept. Make sure that the paint job is up to scratch and that the concrete outside your property is smooth and sealed. 

 

Think outside the box 

It’s true that in order to facilitate any kind of positive change, you generally have to think outside the box. One of the best ways in your commercial space is to literally think outside of the space. 

  • What are you doing with the roof? 
  • Is it just sitting there? 
  • Is it high enough to rent out for, say, mobile phone towers? 

You could add a conference room or a fitness centre inside the building to facilitate business meetings and a potential gym rental opportunity for sports teams or personal training businesses. 

You could also consider adding epoxy flooring to your commercial space. Epoxy floors are easy to clean, look great, and beautify concrete surfaces.

 

Looking to sell? Lease long-term 

If you’re looking to sell your investment, one of the best ways to ensure investors are to offer longer-term leases to your existing business clients. 

A five or ten-year lease is going to be a lot more attractive to a potential buyer — who knows that they’ll have money coming in right away and won’t have to lift a finger — than several dozen or several hundred one-year leases. It’s all about long-term thinking for your potential buyer, try your best to accommodate that thinking first. 

Whether you’re investing in a commercial property for the first time, or have been in the investment game for a while now, knowing how to increase your property value is a life-long skill that you can apply to other parts of life. There are plenty of ways to increase commercial property values, but it is sometimes a bit of creativity on your part.

 


costs when buying a house

9 Costs to Watch Out For When Buying A House

Buying property can come with many hidden costs beyond the asking price or mortgage deposit. Whether you are buying your first home or investing in a new property, you must be aware of the extra fees you might have to fork out your money.

 

1. Moving costs

If you are moving to a new home, you might easily forget the cost of hiring a van or a removal company. 

Depending on how much you own and the location of your new home, you might be able to transport your possessions in a few trips yourself. Removal companies can be expensive. Ensure you factor in this hidden cost.

 

2. Maintenance and renovation 

Most people want to renovate their new home to suit their style. But, depending on the condition of your new home, the cost of renovating or ongoing maintenance might rack up your fees.

It is advisable to save between 1% to 4% of your property’s value for maintenance and upkeep. Of course, you do not need to have the money saved for future care right now as it is an ongoing expense. But keep in mind the potential costs when budgeting.

 

3. Mortgage fees

Beyond the actual mortgage repayment and deposit, there are additional fees. These can include fees for appraisals, home inspections, personal or bridging loans, applications, credit checks, and admin.

These costs can range from the hundreds to thousands — usually between 2% to 5% of the home price. They are inevitable finances that come with buying a new home. Make sure you stay on top of these fees, so you don’t end up paying any twice. 

 

4. Stamp duty

If you are investing in a second property, you are liable to pay stamp duty. It is a government tax and how much you pay is dependent on where you are. Different countries and different states have various stamp duties. It also depends on how large a loan you are taking out against the property.

 

5. Stata properties

Buying within an apartment complex or a strata building comes with its own hidden costs. Ensure you are aware of what you are purchasing and what you are responsible for. 

You might need to factor in maintenance costs of the outer walls of your apartment, or you might have to pay a maintenance fee to the body corporate. There are many things to consider when buying within a strata building that might impact your budgeting.

 

6. Broker fees

If you’re a first-time buyer, you might want to hire a mortgage advisor’s assistant. While this is not a requirement of buying a home, it might be good to avoid any extra expenses or surprises later on. 

Fees can range depending on the skill and experience of the broker. If you choose to employ their assistance, it is a good idea to set aside a few hundred to a thousand dollars.

 

7. Legal fees

You will also have to pay a solicitor in the process of buying a new house. A solicitor will handle all the legal aspects of your purchase, such as assessing the title for any concerns that will prevent you from buying or selling the property in the future.

A solicitor can be pretty expensive — usually within the thousands. Make sure to get a breakdown of the fees to know precisely what you are paying for. 

 

8. Surveys

Your new home will need inspections and surveys to ensure it is suitable to buy and live in. You don’t want to invest in a new property only to find out later that you need to pay exorbitant fees to fix the roof or a leaky balcony. The more money you pay your surveyor, the greater detail you will get.

 

9. Insurance

You might want to budget for many different kinds of insurance, from homeowners insurance to indemnity insurance. It will protect you in case something goes wrong with your buying experience. If you are buying a rental property, you also need to get landlord insurance.  

Buying a new home is an exciting prospect. You don’t want your investment journey to be tarnished by unexpected costs. Ensure you understand every payment you make and budget for all potential fees. 


Do-Loans-Help-Your-Credit-Score

Do Loans Help Your Credit Score?

Taking out a personal loan has the potential to impact your credit score, be it negatively or positively. Whether the effect is positive or negative will largely depend on whether you meet repayments on time or not.

 

How Is a Credit Score Calculated?

When people make reference to a credit score, they are referring to a number that reflects a consumer’s creditworthiness. The higher the credit score, the better the borrower profile. A credit score is made up of a few factors including number of open accounts, level of debt, repayment history and credit mix.

 

Calculating-credit-score

 

Each of the three main Credit Reference Agencies (CRAs) will have a different way of working out what your credit score is. This means that there's no one number when it comes to your credit score, but a variation of your score depending on the CRA. The three credit reference agencies are Experian, Callcredit and Equifax.

 

How Do Personal Loans Affect Your Credit Score?

Personal loans can affect your credit score at different stages, from the initial research phase all the way through to debt consolidation.

If you are searching for a loan, be aware that even these initial searches have the potential to impact your credit history as many of the details you will have to enter include things such as your earnings and level of debt. Additionally, any loan applications can impact your credit score, particularly if the application is rejected.

Borrowers who can regularly meet repayments for their personal loans and who can effectively manage any debts can positively impact their credit score.

 

How Does Applying for a Loan Affect Your Credit Score?

When you apply for a loan, any credit agencies that you are working with will be notified as they will need to assess your financial situation and ensure that you can afford loan repayments.

 

Applying-for-loan

 

Overall credit history tends to carry more weight than a single loan application in terms of how much it affects your credit score. Thus, if you have a generally good credit history (i.e. you meet repayments on time and effectively manage your debt), this will most likely supersede any impact made by a new loan application.

 

Could a Personal Loan Boost Your Credit Score?

If you take out a personal loan and regularly meet repayments on time, it is possible to boost your credit score as it shows you to be a responsible borrower.

However, it should be noted that many people need to take out a personal loan due to being in poor financial circumstances. If this is the case, it may not be advisable to take out a personal loan in order to build credit.

 

How Can I Use a Personal Loan To Build Credit?

There are different ways that personal loans can be used to improve your credit scores:

  • Increase your credit history - the longer you have a credit account, especially one which shows responsible debt management, the better it looks to lenders. In order to start building your credit history, taking out a personal loan and meeting all payments on time can be a good starting point.
  • Improve / maintain credit history - payment history represents 35% of your credit score so has the potential to make a big impact. If you take out a personal loan, regularly making monthly payments on time will positively boost your credit.
  • Reduce your credit utilisation ratio - your credit utilisation ratio is the amount of revolving credit you are using relative to how much you have left. You can reduce the amount of revolving debt you owe by paying off credit card debt with a personal loan. This will lower your credit utilisation ratio and raise your credit score.
  • Diversify the type of credit on your credit report - different types of credit can benefit your credit as credit mix represents approximately 10% of the credit score. Taking out a personal loan can help strengthen your credit and diversify your profile.

 

Can Certain Types of Personal Loans Help To Build Credit?

Any personal loan paid back on time can have a positive impact on your credit. However, a couple of loans are specifically designed to build credit.

 

Loans-helping-build-credit

 

1. Credit-builder loans: Credit-builder loans are good for starting a credit score from scratch or if you have poor credit. They help borrowers start to build a positive payment history and are usually for smaller amounts of credit. The borrower makes deposits payments into a dedicated savings account and will receive the money after the repayment period minus any interest or fees.

2. Debt consolidation loans: Debt consolidation loans could be a good option for those who have multiple debts with high interest rates. You can take out a debt consolidation loan in order to streamline your debt and leave you with just one loan to manage. Depending on your credit score, you may also be eligible for a lower interest rate.

This could help your credit in the long-run as not only does it make your payments easier to manage, on-time payments can help to boost your credit score over time.

3. Secured personal loans: Secured loans require the borrower to put forward collateral to secure the loan. Although the money can be used for any purpose, if your goal is to build credit, a good strategy is to save the money and repay the loan over time.

 

How Quickly Will a Loan Build Credit?

Building credit using a loan is not a fast process. Usually, it takes at least six months to generate your first credit score and much longer in order to establish a good or excellent score.

 

Should I Take Out a Loan To Build Credit?

A personal loan can cause a slight hit to your credit score on a short-term basis but regularly, timely payments can quickly boost it back up and positively impact your credit. The strategy of taking out loans in order to build credit will only work if you can afford to repay the loan on time.

If you default on the loan or make any late payments, your credit score will be negatively impacted and that can be hard to come back from. Not only can it detrimentally impact your credit score, it can reduce your borrowing power for other lines of credit in the future.