Bits Finance

Archive for March, 2011

Residential mortgages are very similar to commercial ones, in that the commercial premises are security for the loan. So in layman’s terms, if you can’t keep up with your repayments, the loan is repaid by the lender selling the property and using the sale proceeds to cover the loan amount.

A commercial mortgage lender will place a legal charge on the premises or land involved. This is a document held by the land registry and details those who have a legal claim on the property. These are the people and organisations that would require repayment if the property were to be sold.

In general commercial mortgage will have two constituent parts these being the actual amount borrowed plus the costs associated with borrowing, normally the interest on this amount. As with residential mortgages there are a variety of commercial mortgages on offer including straight repayment and interest only. With interest only you will be paying off only the interest with a lump sum required at the end of the mortgage term to pay of the original capital amount borrowed. Whilst a repayment mortgage will be paying of both the interest and the capital off over the period of the mortgage.

In almost all cases a commercial mortgage will not be classed as a taxable income but always double check with an accountant or tax specialist to make sure you’re not leaving yourself open for a broadside from HMRC or the Inland Revenue.

The advantage for borrowers is that there are many different kinds of contract that they can take advantage of, so lots of different financial needs can be accommodated. The most secure deals tend to be fixed rate mortgages because they guarantee a fixed repayment over a period of time. The price of this security is a slightly higher rate of interest than a variable rate, but it makes it easier to budget as you will know what your repayments will be.

Under a Variable Rate commercial mortgage you can expect you interest rate to only increase when the Bank of England base rate is changed. At the time of writing, it was still on the historic low of 0.5%, but that does not mean you interest rate will be 0.5%. The average interest rate for commercial mortgages from lenders is 3% above the base rate, so it would currently be 3.5%. But with the base rate expected to rise sharply before the end of 2011, it would not be strategically wise to take on a variable mortgage unless you are a making a very healthy turnover and don’t mind a reduction in profits.

As with residential mortgages, there is a penalty for early repayment on commercial mortgages. If you are in the fortunate position to pay off a commercial mortgage with a lump sum before the term of the loan is up, the bank will impose an exit charge on you. This will be included in your mortgage agreement so read it carefully before you decide on early repayment.

No loan will be considered without buildings insurance. The bank or lender wants to make sure that its loan is properly secure against the threat of fire or damage. Contents insurance, whilst optional, is advisable, especially if you are operating a buy to let business with furnished properties.

Liability insurance is also an important issue. Liability insurance covers legal costs if someone is hurt or injured on or inside your commercial premises. This is important because legal costs can be high if you are taken to court for an injury which occurred inside your commercial property.

One of the best pieces of advice is that if you are looking for a commercial mortgage, speak to a broker who has access to deals that are not publicly available, and they can also explain in more detail about the types of commercial mortgage available so that you can make a more informed decision.

The purpose of this article is to outline some very important, yet often overlooked bits of information regarding the feasibility of utilizing credit cards to actually get out of debt. I am sure that most of you are inundated daily by credit card applications and the latest greatest credit card offers. It should be obvious that these offers are simply a prime example of the famous bait and tackle method. However, it is very possible to utilize these offers to your advantage. I will list a few methods below.

If you are currently bogged down by credit card debt and really feel stuck due to the high rate you seriously need to consider opening another credit card. That is probably the last thing you thought I would recommend, however, I firmly believe it is the best option for some people. Many will look to debt consolidation companies for a quick fix and you may have looked into them as well. You need to consider this before taking that step. Most debt consolidation companies affect your actual credit score almost as badly as filing bankruptcy does (one step up from Bankruptcy). Also, a majority of the debt consolidation companies out there are owned by the credit card companies. So, why open a new credit card?

You must utilize the credit card companies’ bait and tackle method to your advantage and open up a new card. I should preface this first by saying that it is likely something you’ve already thought about, maybe even done already. This requires pure discipline and if you don’t have it don’t do this. I am aware that an abundance of people are already doing this and it is nothing new, all I am here to say is that it works and should be considered.

The first thing you need to do is focus on offers on balance transfers that give you either 0% or below prime for the life of the balance transfer. For example, I currently have two credit cards, one with a rate of 0% on the entire balance (for the life of the balance) and the other with a rate of prime minus 2% (also for the life of the balance). 100% of my credit card debt falls across these two cards and I can sleep at night knowing that I am not getting charged 20+% and that my debt snowball process will actually be effective. You should also consider that the offer is void if you make a late payment. This is where the discipline comes in. You need to use your banks online bill payment option, make sure your account has over draft protection and set it up to make your payment automatically. Also, and even more importantly, DO NOT ACTUALLY USE THE CARD!

Finally, there are a ton of misconceptions that opening/closing multiple credit cards will negatively affect your credit score. I am here to tell you that it will negatively affect your credit score, however, no where near like going to a debt consolidation company would.

There is good news for investors in the Indian stock market with the announcement of the Union Budget. It is positivism that is dominating the scenario. With measures such as 40K crore disinvestment in Public Sector Undertakings (PSUs) in the next fiscal, rise in investment limit for foreign funds in corporate bonds, no rise in excise duty, allowing foreign investors to directly invest in mutual funds, and more have only shored up the market sentiments. The BSE sensex and nifty are all geared up to exhibit positive results henceforth. No wonder predictions of market experts of the BSE sensex crossing the 24000 mark and nifty 7500 mark will certainly seem true if the market continues going up with little downtrends. Volatility of course cannot be done away with. It is how you, as investors, play safe in stocks listed in the NSE of India and BSE of India.

As per NSE and BSE live statistics, cutting on excise duty on development and manufacturing of hybrid vehicle kits from the existing 10 percent to 5 percent has been proposed. Well, this is not the end of the measures announced by the Budget. Exemption on counter-vailing duty on import of special hybrid parts and customs has further led stocks listed in the NSE of India and BSE of India gain ground. With the clearance of the Banking Regulation (Amendment) Bill 2011, the financial sector will see a big boom in the near future. Thanks to the decline of food inflation by 1 percent; this will cause the BSE sensex and nifty to exhibit rising graphs with very negligible downtrends.

BSE live statistics also exhibits the gainers of the companies listed in the BSE of India following the announcement of the Union Budget; worth mentioning are M&M, Tata Motors, BHEL, Jaiprakash Asso, Maruti Suzuki, ITC, HDFC, Bajaj Auto, REL Com, Larsen, Hindalco Ind, State Bank of India, and Sterlite Industries, to name a few. This is only a tip of the iceberg. There are more BSE live statistics to be considered if you want an overall view of the stock market concerning the BSE of India. There are top gainers and top losers and more related news going through which you can decide on which stocks to invest for the short term. Long term investment, especially in blue chip companies, will require you a one-time research to know about the company’s growth record over the past several years. And if you happen to invest for the long term in a company that has maintained a consistent growth record, you need not worry further once you put in your money. You are sure to get the returns and you need not worry about the often volatile market atmosphere. Yes if you are going to invest for the short term in stocks listed in the NSE of India and BSE of India, you will always have to stay updated with the nifty and BSE sensex.