Friday, November 21, 2008

Ways to Avoid Small Business Lending Disasters

When a small business owner wishes to get hold of some extra funding through lending sources it can be quite a tricky and costly process and there are many pitfalls which one must try to avoid in order to get the cheapest and most efficient funding for one’s business. There are some pitfalls to look out for which if avoided can really help you benefit in the Short and long term running of your day to day business affairs.
By taking the time necessary in securing the best loan terms possible for financing your small business operations you can perhaps avert many disasters that could really affect the day to day running and future growth of your business so this needs to be looked at with great care and no rush decisions should be implemented.

Two things that need to be considered at this point are the following:

1.Are you in need of a long term loan or do you just want a short term loan to bail you out of a crisis? This will indeed determine the type of loan that you will require for the running of your business. There are many loan types available and you need to look into what your resources are and what your needs are so that you can focus on the repayment amount for the loan intended.

2. Do not go this alone. Unless you yourself are a financial expert it is much more practical and it will give you also that much greater ease of mind if you consult an independent Financial Advisor who has access to all the ins and outs of different commercial and business loan rates available on the market. Of course you should also take a peek online and look at what is available so that you can have a rough idea as to what it is all about once you do make up your mind to consult with a Financial Advisor in your area or online.

3. Do not just go for the first loan that you find offered to you. Make sure you exhaust all possibilities before making the final choice as rush jobs can make you pay heavy penalty as many people hit the Panic Button and never bother to read the fine print as to what is being offered. Make sure you go over each loan thoroughly with an expert and ask questions about early repayment penalties etc or is it better to go for a line of credit? Financial Advisors are there for this purpose so you shouldn’t feel guilty to ask the relevant questions in order to secure the most economical loan for your business needs.

Sunday, November 9, 2008

Top 4 Mortgage Types in UK

The UK mortgage market has a variety of loan programs for consumers to choose from. Each option comes along with distinct features and benefits which one needs to understand in order to select the right offer. Out of all options available, the 4 widely popular options are listed below:

Variable rate mortgage or ARM:
Variable rate mortgages are loans in which the interest rates vary from time to time. Lenders offering variable rate loans or ARMs (as these are known in US) fix the mortgage rate at 1%-2% above the Standard Variable Rate (SVR) which is based on the benchmark interest rate set by the Bank of England.

Fixed rate loans:
Fixed rate mortgages are those in which the interest rate is fixed for a certain period of time, say 2, 3 or 5 years after which the lender may convert the rate into a Standard Variable Rate for the remaining loan term. The Standard Variable Rate can be higher than the fixed rate you were offered initially. Fixed rate mortgages are available both as an interest-only or repayment loans.

Capped rate mortgage:
Capped rate loans have features of fixed and variable rate mortgages or Adjustable Rate Mortgage. The lender charges an interest rate pretty close to the prevailing rates and offers the guarantee that rate won’t go beyond a certain limit. The best thing about such loans is that the borrower’s mortgage rate can fall but there’s a limit beyond which it will never be raised, no matter how much the prevailing rates go up.

Discount rate mortgage:
Discount rate loans are those in which you get a discount off the Standard Variable Rate. The discounted rate is usually set at few percentage points below the Standard Variable Rate. In case of a Stepped discount mortgage, one gets a rate discount, say 2% in the first year, and 1% in the second year.

The best way to select from any of the above programs is to collect information on how these loans work and what you need to pay. Then compare the offers and take the right decision keeping in mind your affordability.