Loans Disscusstion
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Loans:
A loan is a type of debt. All material things can be lent but this article focusses exclusively on financial loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt.
Secured Loans:
A loan is a type of debt. All material things can be lent but this article focusses exclusively on financial loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt.
Acting as a provider of loans is one of the principal task for financial institutions. For banks loans are generally funded by deposits. For other institutions issuing of debt contracts, such as bonds is a typical source of funding.
Other types of debt include mortgages, credit card debt, bonds, and lines of credit. A mortgage is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The bank, however, is given the title to the house until the mortgage is paid off in full. If the borrower defaults on the loan, the bank can repossess the house and sell it, to get their money back.
The abuse in the granting of loans is known as predatory lending. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her.
The term "Secured loans" adds additional specificity to the basic Loan to Value which simply indicates the ratio between one primary loan and the property value. When "Secure" is added, it indicates that additional loans on the property have been considered in the calculation of the percentage ratio.
Secured Loan to Value is an amount in addition to the Loan to Value which simply represents the first position mortgage or loan as a percentage of the properties value.
Personal Loans:
Personal finance is a detailed analysis of financial flows at various points in time. For example, we may receive employment income today, but have to pay college tuition fees next year. Mortgage payments, interest earned, insurance premiums, and numerous other financial flows are recurring events that repeat at monthly or yearly intervals. Because these involve several time periods, we have to ask "What role does time have in these financial calculations?".
We know that if we deposit money in a bank account we will receive interest. Because of this, we prefer to receive money today rather than in the future. Money we receive today is more valuable to us than money received in the future by the amount of interest we can earn with the money. This is referred to as the time value of money. To adjust for this time value, we use two simple formula. The present value formula is used to discount future money streams, that is, to convert future amounts to their equivalent present day amounts. The future value formula is used to convert today's money into the equivalent amount at some time in the future.
All personal financial planning done by professionals uses these time value formula, as well as several more complicated variants of the formulas. To ignore the role that time plays in financial planning is to ignore one of the most important principles of personal finance.
The financial planning process is a dynamic process that requires regular monitoring and reevaluation. In general, it has five steps: (assessing your situation, setting goals, crafting a plan, taking action, and monitoring your progress)...more...
Home Loans:
A home equity loan is a type of loan in which the borrower uses the equity in his home as collateral. These loans are sometimes useful for families to help finance major home repairs, medical bills or college educations.
Closed end home equity loan
The borrower receives a lump sum at the time of the closing and cannot borrow further. It is possible to borrow up to 100% of the assessed value of the home, less any liens. These fixed rate loans can be amortized up to 15 years with a 3, 5, or 7-year balloon payment. When the balloon balance is due, the borrower can pay off the balance or refinance.
Open end home equity loan
This is a revolving credit loan where the borrower can choose when and how often to borrow against the equity in the property. Like the closed end loan, it may be possible to borrow up to 100% of the value of your home, less any liens. These lines of credit are available up to 30 years at a competitive variable interest rate. The minimum monthly payment can be as low as only the interest that is due.
Both are usually referred to as second mortgages, because they are secured
against the value of the property, just like a traditional mortgage. Home equity loans and lines of credit are usually for a shorter term than first mortgages. Some people are able to deduct home equity loan interest on their personal income taxes.
Debt Consolidation Loans:
Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.
Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, which is most commonly a house (in this case a mortgage is secured against the house.) The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset in order to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.Sometimes, debt consolidation companies can discount the amount of the loan. When the debtor is in danger of bankruptcy, the debt consolidator will buy the loan at a discount. A prudent debtor can shop around for consolidators who will pass along some of the savings. Consolidation can affect the ability of the debtor to discharge debts in bankruptcy, so the decision to consolidate must be weighed carefully.
Debt consolidation is often advisable in theory when someone is paying credit card debt. Credit cards can carry a much larger interest rate than even an unsecured loan from a bank. Debtors with property such as a home or car may get a lower rate through a secured loan using their property as collateral. Then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest. In practice, many people are in credit card debt because they spend more than their income. If that habit continues, the consolidation will not benefit them much because they will simply increase their credit card balances again.
Home Equity Loans:
Bridge Loans:
A bridge loan (or swing loan) is a type of short-term loan in the financial industry. Bridge loans are typically taken out for a period of 2 weeks to 3 years in order to finance projects. Bridge loans are often used for commercial real estate purchases, to quickly close on a property, retrieve real estate from foreclosure, and to take advantage of a shot-term financing opportunity in order to secure long term financing. Speed is a bridge loan's number one asset.
Example: If you are trying to convert an apartment complex into condos and a bank will provide you with a sum of money only after a five month period, you might take out a bridge loan to finance your project while you are waiting for the bank.A hard money loan is a specific type of financing in which a borrower receives funds based on the value of a specific parcel of commercial real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution.
Home improvement loans:
Installment credit is a type of credit that has a fixed number of payments, in contrast to revolving credit.
Examples
* Land loan
* Home construction loan
* Home mortgage
* Home improvement loan
* Personal loan
Bad Credit Loans have never been so cheap. And with the Bank of England leaving base rate unchanged at 4.75 pc last week, good deals are likely to keep coming on to the market.
But Bad Credit Loan rates are difficult to compare. The best deals are often 'typical rates', which mean only those with squeaky clean credit histories and a stable background will get them.
And these Bad Credit Loans are value for money depends on the lender and the amount borrowed.Just spending a few minutes at Secure Finance will put the best offers on Bad Credit Loans at your fingertips.
Student Loans:
Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually carry lower interests than other loans, and are usually issued by the government.
Britishundergraduate and PGCE students can apply for a loan through their local education authority (LEA) in England and Wales, the Student Awards Agency for Scotland (SAAS) or their local education and library board in Northern Ireland. The LEA, SAAS or education and library board then assesses the application and determines the amount that the student is eligible to borrow, as well as how much tuition fees, if any, the students' parents must pay. The family's income, whether the student will be living at home, away from home or in London, disabilities and other factors are taken into account. 75% of the full loan (around £3,000) is available to all students, with only the final 25% being means-tested (taking the total available up to as much as £4,000). It is paid in three instalments during each year of the student's course (one per term). Special rules apply for some courses and for part-time courses.
Loans are provided bytheStudent Loans Company and do not have to be repaid until students have completed their course and are earning £15,000 a year (£10,000 until April 2005). The interest rate is updated annually and is tied to inflation (currently 2.6%), making the loan interest-free in real terms. The loan is normally repaid using the PAYE system, with 9% of the graduate's gross salary over £15,000 automatically being deducted to pay back the loan. There is no particular schedule for clearing the debt, but, if it has not been cleared 25 years after repayment began, or the student turns 65 years old, the remaining debt will be cancelled.
The Higher Education Act 2004 will make significant changes to the loans system in England, Wales and Northern Ireland from 2006. Up front tuition fees will be abolished, with the fee being added to students' loans for them to pay back after their course is finished. However, instead of the tuition fee being fixed at around £1,150 for all universities (which, due to means-testing, not all have to pay), universities will be able to charge variable fees of up to £3,000. Critics claim these top-up fees will create tiers of "expensive" and "cheap" universities, and make university financially inaccessible to many students. As a result, there have been national demonstrations and protests by students' unions.
A loan is a type of debt. All material things can be lent but this article focusses exclusively on financial loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt.
Secured Loans:
A loan is a type of debt. All material things can be lent but this article focusses exclusively on financial loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt.
Acting as a provider of loans is one of the principal task for financial institutions. For banks loans are generally funded by deposits. For other institutions issuing of debt contracts, such as bonds is a typical source of funding.
Other types of debt include mortgages, credit card debt, bonds, and lines of credit. A mortgage is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The bank, however, is given the title to the house until the mortgage is paid off in full. If the borrower defaults on the loan, the bank can repossess the house and sell it, to get their money back.
The abuse in the granting of loans is known as predatory lending. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her.
The term "Secured loans" adds additional specificity to the basic Loan to Value which simply indicates the ratio between one primary loan and the property value. When "Secure" is added, it indicates that additional loans on the property have been considered in the calculation of the percentage ratio.
Secured Loan to Value is an amount in addition to the Loan to Value which simply represents the first position mortgage or loan as a percentage of the properties value.
Personal Loans:
Personal finance is a detailed analysis of financial flows at various points in time. For example, we may receive employment income today, but have to pay college tuition fees next year. Mortgage payments, interest earned, insurance premiums, and numerous other financial flows are recurring events that repeat at monthly or yearly intervals. Because these involve several time periods, we have to ask "What role does time have in these financial calculations?".
We know that if we deposit money in a bank account we will receive interest. Because of this, we prefer to receive money today rather than in the future. Money we receive today is more valuable to us than money received in the future by the amount of interest we can earn with the money. This is referred to as the time value of money. To adjust for this time value, we use two simple formula. The present value formula is used to discount future money streams, that is, to convert future amounts to their equivalent present day amounts. The future value formula is used to convert today's money into the equivalent amount at some time in the future.
All personal financial planning done by professionals uses these time value formula, as well as several more complicated variants of the formulas. To ignore the role that time plays in financial planning is to ignore one of the most important principles of personal finance.
The financial planning process is a dynamic process that requires regular monitoring and reevaluation. In general, it has five steps: (assessing your situation, setting goals, crafting a plan, taking action, and monitoring your progress)...more...
Home Loans:
A home equity loan is a type of loan in which the borrower uses the equity in his home as collateral. These loans are sometimes useful for families to help finance major home repairs, medical bills or college educations.
Closed end home equity loan
The borrower receives a lump sum at the time of the closing and cannot borrow further. It is possible to borrow up to 100% of the assessed value of the home, less any liens. These fixed rate loans can be amortized up to 15 years with a 3, 5, or 7-year balloon payment. When the balloon balance is due, the borrower can pay off the balance or refinance.
Open end home equity loan
This is a revolving credit loan where the borrower can choose when and how often to borrow against the equity in the property. Like the closed end loan, it may be possible to borrow up to 100% of the value of your home, less any liens. These lines of credit are available up to 30 years at a competitive variable interest rate. The minimum monthly payment can be as low as only the interest that is due.
Both are usually referred to as second mortgages, because they are secured
against the value of the property, just like a traditional mortgage. Home equity loans and lines of credit are usually for a shorter term than first mortgages. Some people are able to deduct home equity loan interest on their personal income taxes.
Debt Consolidation Loans:
Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.
Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, which is most commonly a house (in this case a mortgage is secured against the house.) The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset in order to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.Sometimes, debt consolidation companies can discount the amount of the loan. When the debtor is in danger of bankruptcy, the debt consolidator will buy the loan at a discount. A prudent debtor can shop around for consolidators who will pass along some of the savings. Consolidation can affect the ability of the debtor to discharge debts in bankruptcy, so the decision to consolidate must be weighed carefully.
Debt consolidation is often advisable in theory when someone is paying credit card debt. Credit cards can carry a much larger interest rate than even an unsecured loan from a bank. Debtors with property such as a home or car may get a lower rate through a secured loan using their property as collateral. Then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest. In practice, many people are in credit card debt because they spend more than their income. If that habit continues, the consolidation will not benefit them much because they will simply increase their credit card balances again.
Home Equity Loans:
Bridge Loans:
A bridge loan (or swing loan) is a type of short-term loan in the financial industry. Bridge loans are typically taken out for a period of 2 weeks to 3 years in order to finance projects. Bridge loans are often used for commercial real estate purchases, to quickly close on a property, retrieve real estate from foreclosure, and to take advantage of a shot-term financing opportunity in order to secure long term financing. Speed is a bridge loan's number one asset.
Example: If you are trying to convert an apartment complex into condos and a bank will provide you with a sum of money only after a five month period, you might take out a bridge loan to finance your project while you are waiting for the bank.A hard money loan is a specific type of financing in which a borrower receives funds based on the value of a specific parcel of commercial real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution.
Home improvement loans:
Installment credit is a type of credit that has a fixed number of payments, in contrast to revolving credit.
Examples
* Land loan
* Home construction loan
* Home mortgage
* Home improvement loan
* Personal loan
Bad Credit Loans have never been so cheap. And with the Bank of England leaving base rate unchanged at 4.75 pc last week, good deals are likely to keep coming on to the market.
But Bad Credit Loan rates are difficult to compare. The best deals are often 'typical rates', which mean only those with squeaky clean credit histories and a stable background will get them.
And these Bad Credit Loans are value for money depends on the lender and the amount borrowed.Just spending a few minutes at Secure Finance will put the best offers on Bad Credit Loans at your fingertips.
Student Loans:
Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually carry lower interests than other loans, and are usually issued by the government.
Britishundergraduate and PGCE students can apply for a loan through their local education authority (LEA) in England and Wales, the Student Awards Agency for Scotland (SAAS) or their local education and library board in Northern Ireland. The LEA, SAAS or education and library board then assesses the application and determines the amount that the student is eligible to borrow, as well as how much tuition fees, if any, the students' parents must pay. The family's income, whether the student will be living at home, away from home or in London, disabilities and other factors are taken into account. 75% of the full loan (around £3,000) is available to all students, with only the final 25% being means-tested (taking the total available up to as much as £4,000). It is paid in three instalments during each year of the student's course (one per term). Special rules apply for some courses and for part-time courses.
Loans are provided bytheStudent Loans Company and do not have to be repaid until students have completed their course and are earning £15,000 a year (£10,000 until April 2005). The interest rate is updated annually and is tied to inflation (currently 2.6%), making the loan interest-free in real terms. The loan is normally repaid using the PAYE system, with 9% of the graduate's gross salary over £15,000 automatically being deducted to pay back the loan. There is no particular schedule for clearing the debt, but, if it has not been cleared 25 years after repayment began, or the student turns 65 years old, the remaining debt will be cancelled.
The Higher Education Act 2004 will make significant changes to the loans system in England, Wales and Northern Ireland from 2006. Up front tuition fees will be abolished, with the fee being added to students' loans for them to pay back after their course is finished. However, instead of the tuition fee being fixed at around £1,150 for all universities (which, due to means-testing, not all have to pay), universities will be able to charge variable fees of up to £3,000. Critics claim these top-up fees will create tiers of "expensive" and "cheap" universities, and make university financially inaccessible to many students. As a result, there have been national demonstrations and protests by students' unions.
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