If you are considering taking a new home loan, you should also take into account the factors that influence the rates. There are some factors that are within your control.

New Home Loan: Factors to Consider

One should consider the following factors while applying for a new home loan:

Debt to Income Ratio: Before taking a decision on the amount of loan to be extended, every lender calculates your debt to income ratio. This is calculated by taking into account your monthly debts and income. A high debt to income ratio means that a considerable part of your income is going towards the payment of your existing debts, which signifies high risk for lenders. If you have a high ratio then the interest rate is likely to be higher.

Payment History: You can improve your chances of getting a good interest rate by paying your bills on time. These could be credit card bills or car or rent payments. A single late payment can affect your credit history.

Property Type: The type of home loan that you are entitled to is influenced by the kind of property against which you take the loan. Property may be a single family home, multi family home or condominium. The rates are lower for properties that bear lesser risk.

Loan Amount versus Property Value: The lender will compare the loan amount with the value of the property to calculate the LTV (loan to value) ratio. If this ratio is high your mortgage will carry higher risk, which will end up in a high interest rate on your home loan.

Loan Amount and Duration: The higher the loan amount, the higher will be the interest rate. Moreover, the longer the duration of the loan, the lower will be the rate of interest on your home loan.

Closing Costs: If you do not wish to pay all the closing costs, then you can expect to pay higher interest rates. This is done to compensate for the closing costs.

Down Payment and Points: You can get good interest rates by paying down at least 10% of the loan. You can also pay points to lower the interest rates by paying your principal and lowering your monthly payments.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

UNDERSTANDING ASSET-BASED FINANCING

Asset-based financing is a way for rapidly growing, cash-strapped companies to meet their short-term cash needs. In general, companies can tap their assets to generate cash flow through asset-based loans or through factoring.
The asset-based financial services industry has burgeoned in recent years, and small businesses have fueled much of its growth. Although a stigma is still associated with using your assets to get cash, this type of financing is becoming more popular.

Asset-Based Loans

When you apply for an asset-based loan, you pledge assets to secure a loan from a bank or a commercial finance company. You still own your assets, but if you don’t make good on your payments, the lending institution can seize them.
Asset-based loans are typically for companies with less-than-perfect credit. Interest rates and fees on these types of loans have fallen in recent years due to intense competition, but generally they are higher than traditional bank loans. As with all commercial lending, rates are negotiable. Lenders will look at your credit record, how long you’ve been in business and whether your assets are liquid.
Accounts receivable and inventory are common collateral, but any asset might qualify. When you use accounts receivable to secure a loan, you can expect to get about 60 – 75 percent of the face value of your fresh invoices. The loan-to-value ratio drops rapidly for older accounts.
When you use inventory to secure loans, your lender will most likely use a bonded warehouse — an approved warehouse used to store goods and monitor inventory — and pass the cost on to you. Loan amounts vary widely from about 30 to 80 percent of the value of your inventory.

Advantages and Disadvantages

The main advantage of asset-based financing is that small companies can usually get more cash more quickly than they could from a traditional bank loan. Also, asset-based lenders offer an array of services.

The drawback of asset-based loans is the expense. Using your assets to generate cash flow increases your cost of funds and cuts into profits. You need to weigh your situation carefully and determine whether this type of financing is necessary to expand your company or keep it afloat.

In Short

This product is for clients who have valuable assets, but are in need of short term liquidity. Funds will be advanced against the security of commercial property for a maximum period of twelve months, affording clients ‘breathing space’ to realise their assets without pressure or providing them with the time to secure long term financing from a commercial bank.

Minimum Requirements:

The Borrower must be a Juristic Person in terms of the National Credit Act

• Maximum transaction value not to exceed 60% of valuation
• Valuation of property to be done at clients’ expense.
• Minimum advance of R1 000 000 (no maximum).
• A first bond is to be registered over the property
• Maximum term of the loan of 12 months

If you’re looking for this type of financing, Please consult with Morne Prinsloo .

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za