Are You Going to Co-Sign a Loan? Consider the Following Things!

At times, you get to show your generosity to the family members, close friends and anyone dear to you by co-signing a loan taken by them. Undoubtedly, there is always a soft corner for our loved ones saved in our heart. At the same time, while you may fulfil this helpful gesture, you should know that co-signing a loan is more than just your signature. Therefore, knowing the roles and responsibilities as a co-signer ultimately becomes an issue of paramount importance.

Keeping in mind the repercussions, here are three things that you should consider before co-signing -

• Do Not Jump into the Agreement, Know the Risks  
  What shall be more risky than being equally responsible for the loan taken by some other person? However, you are not meant to receive even a single penny of the loan demanded, whatsoever negative activity is connected to the loan, will affect you equally. For instance, suppose that the actual borrower fails to make the payments on time, this will be added as a negative point on your credit report too.
  
  
• Know Not Only the Risks, Read Out the Terms and Conditions
  No loan is granted without a set of certain terms and conditions. In addition, so will be the loan your closed one has applied, come with- a set of terms and conditions. Since your credit report is equally at stake, you should surely read out the set of those terms and conditions proposed. This shall include reading out the total amount of the loan, length of the loan, interest date as well as the due date. You determine if your family member or friend would easily be able to make the payments. Assume that he/she fails to do so and in that case, imagine yourself making payments. Make sure you’ll be able to, in such case.
  
  
• Stay Always Ready With an Exit Plan
  “Plan B” shall always be there. It’s not necessary that things go wrong, but, in case they do, you have to be steady and ready with your exit strategy. You can keep your credit report from taking a hit if you plan to have a leeway in the return payments. For instance, if the borrower is not able to make the payments, you can think of using the money kept aside for an inevitable misshapen. There are cases that the loan has not been out for some time. This implies that you might not be able to remove your name from the loan. Adding, be aware of the fact that only some loans do actually have the option that allow you to remove your name.

Make sure that you ask everything you’re not so sure about. Bad Credit Rating would certainly not be an option you may consider, anyhow. So, in most of these kinds of financial processes, just use the power of your knowledge smartly and wisely!

Here is How You Can Prevent Bad Credit in Small Business

Beyond any shadow of a doubt, all businesses are sensitive to problems regarding the cash flow. This results in bad credit. However, it’s found that SMEs are more likely to face the problem of bad credit, thereby resulting in lesser opportunities to be able to take a loan whenever the situation demands so.
However, where there is a will there is always a way out too.

Down here, we’ve explained how you can prevent bad credit in your small business:

First of all,
Get back the money your customers owe to you. There must be many clients out there, who must have delayed the payment. You should focus on getting all the debts collected.

Further,
The other way round, just check whether you owe money to your suppliers. Maximize your window while you pay them. You can do that by getting an extension with no extra cost, in case of some suppliers. You can also manage your cash flow in a way that your stock is not overloaded on merchandise. It should be your topmost priority turning over the stock, regardless the size of the business.

Okay! We know that rising costs may trouble you. They possibly affect the small business comparatively even more. However, sigh! You can ask your suppliers about rebates for buying in bulk or getting discounts in case you are paying early for the stock. Try to shop around for the best prices.

Keep yourself updated…
It would be a good financial decision if you shun hesitation and call up your bank to ask about a review regarding the loans you’ve taken before. This will prevent the bad credits pile up. Moreover, there is a regular change in taxation laws and business rules. The changes in the rules and regulations in taxation or business come with a great impact on the cash flow. However, you can stay updated by subscribing newsletters from your local business networks. This way you can cope up with the latest amendments.

Plan ahead!
By that, we mean that just seize the moment and take a good financial management decision if the interest rates in the market are going low. It’d be a great time to negotiate with a lender for bad credit loan at that point of time. Otherwise, the interest rates may rise and you will end up troubled.

Let’s Debunk Some Home Loan Myths

First Myth -    A hefty deposit you would need to get a home loan in Australia.

Usually, 5 to 10 per cent deposit can help you qualify for a home loan.

However, if you have a guarantor, like your parents, you can borrow 100 per cent of the purchase costs.

Second Myth - The services of mortgage brokers are costly.

No, it’s not, rather, it’s Free. Mortgage brokers are paid by the banks.

However, there could be some exceptions like – if the home loan is less than $200,000, if your individual situation is complex, or if you are switching mortgages within the first two years of the loan.

Third Myth -    If you have a bad credit history, you aren’t eligible for a competitive home loan.

Not for everyone as it depends on your individual situation or if you have valid reasons for bad credit ratings, there are possibilities that a bad credit loan provider can consider your case.

Fourth Myth - The only thing to consider is the lowest interest on home loans.

Not necessarily the only thing, there are other costs like set up costs, exit fees, monthly charges, ongoing fees, insurance premium, conveyancing fees, etc. should also be considered that are generally included in the comparison rate you pay towards the mortgage.

Fifth Myth -     Credit cards aren’t considered by the lenders.

It’s a misconception that the borrowing power isn’t affected if you have multiple credit cards. Lenders assume that you have used your credit card up to its limit even if you haven’t. More number of credit cards can lessen the chances of your loan approval. Thus, it better to cancel the credit cards you no longer use or else you can decrease its limit.

Sixth Myth-   Lenders Mortgage Insurance (LMI) is there to protect you if you default on your home loan

If you borrow more than 80% of the value of the property, you pay a fee that is known as LMI. It doesn’t protect you from default, rather, it protects the lender if you go default and unable to pay back the loan. To be insured as a borrower, think of Mortgage Protection Insurance.

If you are still facing any apprehensions or have doubts to clear, then talk to the home loan experts at Loans Direct today.

3 Considerably Helpful Ways to Assess Your Business Loan Capabilities

You must be surely aware of the fact that it’s quite critical and decisive that your business has enough of money to fund the financial operations to be done in the first few years or so. The survival rate of new businesses vary as per the statistics revealed over different time intervals. However, luckily there are many options to fund the business in the first few years in order to establish a strong business in the coming ones. For instance, the most recommended and common options are considered to add more capital, or the other way is to take out business loans. Apparently, you just need an infusion of cash, what so ever might be the way. On one hand, where adding capital does not require you to return the money, a business loan comes along with a recovery schedule. In that case, it becomes necessary to be able to know your business loan capabilities.

Here are three considerably helpful ways to assess your business loan capabilities -  

1. Start with the Review of Your Business Performance
   
   How well do you know your business? Is it important to know it in and out? You bet. Of course, a business owner must be aware of both projections i.e. in-house reports as well as the industry standards. This will put you in a state of accurate assessment of your business with accurate, updated and descriptive financial records and statements as well as the necessary-to-be-known financial ratios. 


2. Consider the Lender’s Perception of Risk
   
   There are factors that may influence your lender’s perception of risk. Consider yourself to be the lender and ask yourself questions like:
   • Can my business repay the loan?
   • Can I repay the loan if the business fails?
   • Is my business having the ability to manage its cash flow?
   • Does my business have a profitable performing history?
   • Who all are my potential or current competitors?
   • What are the strengths of my competitors?
   • Do I have good credit ratings?


3. Plan the Business-cum-Financial Plan
   
   If you get satisfactory answers to the questions above, you should put a step forward to plan the business, plan the finance. A business plan shall be devised in such way that it includes the specific strategies induced to improve the on-going financial operations as well as increase the efficiency of the business. The business plan shall be feasible in a way that the ratio of income to the cash flow remains profitable.

What it really Mean to be Financially Free?

In simple words, financially free means free from any financial obligations, which may include overheads, debt, income and expenses or anything financial. In a country like Australia, it is just a small matter how people perceive it. However, it is more important to know how to become financially free depending upon your individual situation.

• A Debt-free Life
It does not mean that you are financially sound if you are debt free; instead, you still have to work and earn money to meet up your living expenses as well as the taxes. The first thing that matters to be financially free is living a life without any monetary obligation. This can only be achieved if you pay everything you owe on time and maintain a clean credit history.

• Your Income Your Expenses
If your expenses are more than your income then you are far from being free from anything financial. Managing your expenses in the best possible way and contributing a part of your income to your savings account will help you to achieve the goal of becoming financially free.

• Assets are Important
Your financial assets like shares, mutual funds, investment bonds, properties are financial tools to generate annual cash flow whenever you want. By the time you reach old age, these assets prove worthy to help you meet your expenses in a convenient way. If you haven’t done something like this yet, start doing it as soon as you can. Assets are also the important milestone in becoming financially free.

If we go by the books, there can be lots more to do in order to live a life with financial freedom. However, most of the times it depends on circumstances and situations every individual face. Living life financially free is not an easy nut to crack. It takes hours of planning and consideration of numerous factors to walk in the path of achieving it.

It’s better to seek help from professional finance specialists who can figure out the most suitable way for you as per your needs.

Your Start-up Business Can Utilize a Business Loan for Best Results. Let’s know it how…

Business on your mind, business in your dreams, business is your goal and business is your life… Yes we know it very well what it means for someone starting up a venture or planning to cut the ribbon in near future. Starting a business by your own is something you care for just like your child. Save it from all the harm, bring in good things as results and take pride in achieving something through it. Other than your hard work and sincerity, you also need funds to while starting your own business.

Before you start a business, you must be aware of all the aspects related to it. Ask yourself, why you are starting a business. Are you well aware of the required technical and management skills? What about your business planning, like - 

• Do you have the skills to start a business and what are they?
• Your business needs money. How are you going to invest the required amount?
• What are your business objectives and how are you going to achieve them?
• What are the profit margins? How much you expect to make profit from your business?
• How much loan you would need for your business to expand or to keep up and running?

Investing all the money you got in your pocket on your business is a bit risky. Going with a business loan from a bank or a lending institution helps to meet your finance requirement readily through different types of business loan products.

While setting up your business, you should look for ways to save some money without compromising the quality of the product or service you will be delivering to your clients. A business loan at competitive interest rates is the most suitable option to meet the demands of a start-up business. This type of funding not only fulfils the financial needs of a business but also brings a sigh of relief in continuing with the business operations without any hassles.

If you are planning to start a new business or to expand an existing one, take expert’s take on what you need and how much you need.

Expecting Housing Surplus by 2017 – says Goldman Sachs

This is an excerpt from a news post published in Australian Financial Review - http://www.afr.com/real-estate/goldman-sachs-tips-housing-surplus-by-2017-20150416-1mm941

The one who predicted the current surge in housing activity, Tim Toohey - Goldman Sachs head of macro-research in Australia said – “Australia will have a housing surplus by 2017”.

He added - The challenge from 2017 onwards will be to "normalise interest rates" - in other words raise interest rates - just as underlying housing demand is weakening.

In a recent report of Goldman Sachs, Mr Toohey argued that - Australia's population growth is slowing, more than most us realise. By 2017, the population will be 530,000 less than estimated, based on widely used Australian Bureau of Statistics Series B projections.

The birth rate is at historic low, deaths are at historic highs and net migration is "falling fast." Instead of population growth of 1.7 - 1.8 per cent a year in 2015-17, the growth is more likely to be 1.25 per cent a year – as estimated by Mr Toohey. He strongly advocate and support household formation as a key driver of housing demand.

On the other hand, Mr Toohey estimated that - migration, which accounts for two thirds of the population growth since 2008, is falling faster than official estimates.

He wrote - "The primary determinant of net migration to Australia is not the number of illegal immigrants or the number of tourist arrivals, it is the relative strength of onshore versus offshore labour markets; so would you move to a country where you can't get a job?"

Earlier in 2012, Goldman Sachs upgraded its outlook for residential construction because of the emerging undersupply, the largest since the 1970s, as well as the need for a significant cut in interest rates Australia.

Today, Goldman Sachs has estimated, based on the ABS series B projection that - the current housing shortage would remain till the end of 2017 before deteriorating again with rising interest rates. In fact, the downturn is already happening. Goldman Sachs' proxy for net migration predicting just 160,000 extra people in 2014, which is 40,000 below the official figure for the first nine months.

Although, Sydney's rental prices are likely to climb up further before levelling out - according to Domain Group economist Andrew Wilson.