Tips to help you pay back your loan before the deadline

Taking on a loan is not as easy as it seems. You impose a monthly commitment on your income which you have to keep up with, to avoid the penalties of non compliance. Long term loans can be financially exhausting, here are a few ways you can make your payments early and get the burden of loan payment off your back

Pay off the principal amount now and then. This is the best way to reduce long term loans and mortgages. These types of loans are long-term and have an accumulating interest. If you make payments on the interest rates and not on the principal amount, the interest on the loan continues to grow and it will take you longer to finish the payments.  You can reduce the interest rates and the loan by making payments in the principal amount. You can do this yearly or quarterly depending on your disposable income and savings.

The key to paying back the loan before it expires is to borrow what you can afford.  When taking out any form of loan, you need to question your needs. Many people make a mistake of taking loans in excess to cover situation that are nit urgent. When you are taking out a loan, say a mortgage, you need to create a clear plan defining the amount of money you really need. Calculate you disposable income by subtracting commitments from your monthly income, check if the disposable amount is enough to take on another loan. If it is not, you cannot afford to pay a new loan without straining your income

Change your payment method from monthly to biweekly, and increase the amount you pay slightly. Changing to biweekly payment increases the amount of time and money to put down on the loan payments. If you want to repay your mortgages or long-term loan faster, you can talk to your lender to change the rates at which you make the biweekly payments. Even though this method is effective, it can be strenuous if you live from paycheck to paycheck.

Luxuries can be a bit extra on you income. if you have not done it before, it is time to calculate how much you use on luxuries items every month. You could save a lot of money by cutting down the luxuries every month. You can save that money and use it to clear out the principal payments every year.

If you want to make your loan payments early, you need to prepare your income before you take on a loan. If there is too much commitment on your income, it will be hard for you to complete other loans on time. Clear all your debts and financial commitments before you apply for a mortgage or a long-term loan; this is very helpful in increasing your monthly disposable income. In fact you will have enough money to save and pay off your monthly loans payments at the same time.

Final word 

If you do not make the loan payments on time, you may face serious penalties. Use these tips to complete your loan payment early and use your income for financial gains like investment and financial growth.

This is why you should take a long term loan- the pros of long term loans

Long term loans can be a good investment opportunities for a small business. The application process is simple and the payment terms won’t affect your financial stability. all you need to qualify for a long term loan is a good credit, legal identity and proof of income. The payment period can last somewhere between 3 to 20 years or more depending on the type of loan you get.

Here are some good reasons for taking on a long term loan

Long term loans are a source of capital

Some people argue that savings can be a good form of capital but in reality, it is risky and limiting to one form of investment. Long term loan are the best form of capital. You can receive a large amount in loans and use it for different investment ventures. Another great advantage of long term loan id that you can spare the amount of time you would spend saving on an investment and use it to start an investment and a saving simultaneously.

Taking a long term loan is a great way to build your credit

Long term payments include monthly repayment policies that will reflect on your credit history. When you make the monthly payments on time, you create a positive credit result. This means you get more points on your credit. The more payments you make the more points you get. Ensure you make all the payments on time to avoid a negative credit report. a good credit comes with a lot of benefits. It gives you the ability to make requests for bigger loans in the future.

The application process is simple and streamlined

Unlike other loans, long term loans have an easy application process. Lenders require a form of identity, your credit report and a proof of monthly income. it is easy to get a long term loan with a bad credit report, you will receive a lower amount with a high interest rate.

The loan use is not restricted

Some loan lenders often issue their loans with terms of uses. For instance, mortgage loans are strictly for real estate property while automobile loans are meant for car purchases. You can use long term loans to venture into business, buy a car, buy a house or for debt consolidation, the uses are endless.

They can save your small business

Business can be hard to manage, especially if you are bringing in lower profits. Long term loans are a good source of capital for business development. They give you a chance to pick up your business and develop income and profits as you clear the loan in short payments. They are better for businesses compared to short term loans because they do not expire fast and have a a lower interest rate.

You can also use them to make large purchases for immediate growth of your business. If the loan is big enough, you can use it to buy commercial properties which can generate a good income.

Final word

Taking a long term loan can be profitable if you invest it in a good business. Ensure your finances can take on a monthly commitment before you take on any form of loan.

The pros and cons of commercial mortgages

Commercial properties can be a good long term investment, and is a huge business asset. If you make the right choices, you can generate a lot of income in your commercial properties. Most people need mortgages to purchase these types of properties.

Below are some advantages and disadvantages of commercial mortgages, they should guide you through making the right decision

Advantages

Low interest rates

Commercial mortgages have lower interest rates when compared to other forms of business loans. They are the best type of unsecure loans. With commercial mortgages, you can choose the fixed monthly repayment methods. This will help you to plan out a structure of your bills. You can make constant payments every month using the profits from your business.

Financial gains

By investing in commercial real estate, you can create a capital gain with your commercial real estate property. This is a good way of regenerating your capital over long periods of time. Real estate property always appreciates in value when you choose the best location for your property. The equity of your home continues to grow with every mortgage payment you make. This makes the purchase of real estate property a form of investment. Compared to private real estate property, commercial real estate appreciates faster and in a short timeline.

Income potential

When you buy your commercial real estate in a good business environment, it has the potential to generate a high income. You can use the income to pay for the maintenance of the property, cover monthly mortgage expenses and have enough money left for your monthly expenditure and savings. This payment plans will allow you to use some of your profit to focus on other businesses, which is a good way to use your profits.

Rental potential

You can generate maximum income from your commercial property by renting out the extra spaces. You can put this income in your savings for future investment opportunities

There are several options when it comes to ending a mortgage

If you are unable to complete the payments, you do not have to give up on your commercial property. You have the option of renting out more spaces to cover the monthly mortgage payments. You can also decide to rent more spaces or sell part of your property to cover the mortgage payments

Disadvantages

The down payment

The deposit for a commercial mortgage is usually higher than other form of mortgages. Coming up a high amount of down payment can be hard if your business is not doing well.

Maintaining property

Commercial property is expensive to maintain. You will need to carry out constant repairs, higher a property manager, daily maintenance crew, and security. You cannot skip on property maintenance because it determines the appreciation in the property’s value.

Variable interest rates

Variable interest rates fluctuate according to the market economy. When prices are high, you will need to keep up by paying more money on your monthly payments due to the high interest rates.

Failing property value

Sometimes, the fluctuations in market prices can lead to depreciation in the value of your property. This can lead to lower capitals, which means lower income for you and less profits from your commercial property

Final word

The benefits of taking on a commercial mortgage outweigh the disadvantages. Taking on a commercial mortgage is a good move, if you want long term financial gain.

Mortgage loans VS long term loan – which is better

You can use a long-term loan and a mortgage loan to pay for your real estate property. The question is which one will serve the purpose better. Even though long term loans are given out for other purposes, they are convenient to use when you are purchasing a home. Mortgage loans can only be used when you are making a real estate purchase. So what are the differences between the two loans?

Restrictions

Mortgage loans restricted to real estate transactions. You can only use it to buy a commercial property, a private house, land or promote a real estate business. There are endless things you can do with a long term loan. The restrictions are minimal as long as you make the right payments and on time.  you can use long term loans to start a business, buy a car or a house, medical emergency, college funding, the list is endless!

Repayment frequency and payment terms

These two loans are similar when it comes to the mode of repayment. When you receive the loan, you have to sign legal documents with the lender about the payment plans. In both, the payments are distributed monthly for several years until the principal amount and interest rates are covered. Long term interest rates are lower compared to those of the mortgage loans.

Requirements

Long term loans and mortgages basically have the same requirements. You need to be over 18, employed, own a credit card and be in a permanent job for about two years to be considered for a loan application. The requirements for a mortgage are strict compare to those of a long term loan when it comes to scrutinizing. With a poor credit score you have a very low chance of getting a loan form a mortgage broker. You can get a long term loan from banks or lenders even with a poor credit.

Down payments

Mortgage brokers and mortgage lenders require a down payment, usually 20% of the mortgage you will receive, before they approve the loan request. For an unsecured long term loan, you do not need to put down a down payment to get an approval. The down payment on a mortgage may determine how much money you will receive form a lender

Penalties

When you fail to make mortgage payments, lenders will redeem your house as collateral and sell i to recover the rest of the payments. With long term loans, lenders will take your assets as collateral and sell them to regain their money when you do not make the payments as per agreement. Your assets include any property of things that have value and are under your name.

Maximum loan amount

The loan limit of a mortgage loan is higher than that of a long term loan. This is because real estate property requires a huge amount of money. This means you will spend more time repaying the mortgage loan than the long term loans.

Final word

If you are looking to purchase a home, you should go with the mortgage loan. You will get the right amount of money and enough time to pay back the loan. a long term loan is good for small businesses and quick investments.

Cash or Mortgage?  – What’s the best way make a real estate payment?

Everybody dreams of having their own home at some point in life.  The thing is, real estate property is very expensive and some of us have no choice but to take on a mortgage to pay for our desired homes. Some people are rich enough to pay for the house out of their pocket, while other can save enough over a few years to purchase a home. Making a choice on whether to pay using mortgage or cash is difficult, especially for first time owners. The question remains, which is the best way to purchase a home?

Let’s compare the advantages and disadvantages of both financing methods

Cash

Advantages

There are endless reasons why you should use a cash to purchase your home. With cash payments, you can enjoy all the discounts on your house. Most real estate agencies offer discount for people who pay the full amount in cash. Paying in cash means you won’t have to make the monthly mortgage payments. You buy your home and relax knowing you don’t have any debts. The title deed transfer is easier when you make cash payments. You get the title immediately you purchase the home and clear all the finances.

Disadvantages

Paying your house in full cash will leave you broke for a long time. Making house purchases involves more than just paying the seller, you will have to make some repairs and purchase new furniture if you need to. If you do not have money for emergencies, you will not be able to invest in other businesses. There is no guarantee that the value of your home will appreciate, so it may be a loss on your side. Your house will be more of a purchase than an investment.

Mortgage

Advantages

A mortgage makes a home payment easier of you do not have enough savings in your account. When you have the right plan, making the monthly payments will be easier, you can decide the terms of payment with your lender. You can chose from multiple mortgages with different interest rates depending on how you want to pay off the loan. Mortgages helps people afford their dream houses without worrying about the price

Disadvantages

Mortgage loans come with high interest rates that fluctuate depending on the payment options. At the end of it all, you will pay more money than you actually borrowed. Some mortgage lenders have hidden costs and added fees in their payment structures. This means you will make extra payments like legal, insurance and penalty fees on your mortgage payments. Using mortgage to pay for your home means that you will be in debt for a long period of time. It could take more years to repay the loan if you make minimal monthly instalments.

Final word

The final decision on how to finance a home purchase is on you. if you have enough money saved up you can pay the loan in cash. The money should be in excess if you want to start an investment in the next few years or months. If you do not have enough savings to keep some for investments, you can take a mortgage, start a business and make the payments using your profits.