Tag Archives: costs

Term Extension On Home Loan Refinancing

June 19, 2020   Auto Loans

Sometimes due to bad credit or market conditions, it is not possible to get lower monthly payments on your home loan by refinancing. This is due to the fact that those with bad credit usually can not get a lower interest rate and that sometimes, market conditions push the mortgage loans’ interest rate up. However, you can still get lower installments by refinancing your loan with a longer repayment program.

The term extension will get you lower monthly payments because the loan’s capital is spread over a higher number of installments. With this method, if you could not afford your current mortgage loan’s monthly payments, you can obtain lower and affordable installments that you will be able to pay without having to make sacrifices.

Home Loan Repayment Programs

The home loan repayment program or schedule is the duration in time of the home loan. It determines the number of installments you will need to pay throughout the whole life of the loan. Payments can be done one a monthly basis, on a weekly basis, or biweekly too. Depending on the way payments are done and on the duration of the loan, you will obtain the resulting number of monthly payments.

For example: if a home loan has a 10 year repayment program, you will have 120 installments to repay the loan if payments are made monthly. But if payments are made biweekly, you will have 240 installments that will of course be of a lower amount than in the case of the loan payable on a monthly basis.

A mortgage loan repayment program can be as long as 30 years. However, the average mortgage loan has duration of 20 years or just a bit more. Thus, if you need to obtain lower monthly payments, it is always possible to refinance your home loan in order to extend the repayment schedule and thus, obtain a lower installment in return.

Consequences of Extending the Loan Term

The consequences of extending the loan term are varied, some of them are positive and others are negative. Thus, you will need to ponder them in order to decide whether home loan refinancing for a longer repayment program is the right option for you. Basically you will need to compare the resulting terms with your needs in order to see if the costs of refinancing are equal or lower than the benefits.

Ultimately, by refinancing for a longer repayment program, you will obtain lower and more affordable monthly payments. If you are lucky enough to refinance with a lower interest rate, you might be able to compensate the higher costs that a longer repayment schedule represents with the savings that a lower interest rate provide, or at least part of them.

This is due to the fact that when you refinance for a longer repayment program you are actually adding interests to your overall loan repayment. Since interests are based on time, a longer repayment program implies more interests and thus an overall larger debt. Even if you obtain lower monthly payments, you are actually paying more on the long run. It is just that the costs are spread over more installments.

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To Buy or To Rent Sydney Office Space? – Five considerations to help you decide

June 2, 2020   Loan Tips

Despite the economic downturn, the Sydney commercial property sector is still looking healthy. As Australia looks poised to come out of the financial slump strong, businesses are taking advantage of current depressed property and rental prices and looking towards the future.

The option of buying or leasing commercial property is certainly something that many small businesses will consider. The decision is something that will come to greatly affect the business in the long run and there are many questions to ask. The individual needs of your business will ultimately determine the best option for you, but here are a number of things that every small business should think about:

Upfront Costs: For some businesses, the most limiting factor to buying office space is the large upfront costs. Down payment on typical Sydney real estate is usually about 25%-30% of the total cost, in addition to fees, inspections and other expenditure. However, if you’re in a position where you can afford to, purchasing a commercial property can pay off in the long run and greatly reduce your future overheads.

Variability: Obviously, one of the most attractive incentives for buying is knowing more accurately the costs you will incur for a certain amount of time. Leasing leaves many businesses vulnerable to the whims of the property sector with some leases pegging rental prices to the Consumer Price Index. However, many areas, such as Grade A office spaces in Sydney CBD, experience much less market fluctuation. Consider the variability of the area and grade of the property you’re looking at.

Appreciation: If you decide to purchase commercial space, you’re adding a valuable asset to your business with the potential for appreciation. Of course, this means you’ll need to do some heavy research to find a property that has good potential and will suit your business’s needs.

Depreciation: With appreciation, comes depreciation and tax considerations. Costs incurred from repairs and renovations to tenanted property are handled differently than private property. Lease holders can claim improvements immediately while owners may be required to depreciate their expenses over time.

Potential Growth: Finding a space that suits your business is very exciting, but what about the future? For many newer businesses, leasing could be the preferred option as it allows them to expand their more readily and with fewer limitations. Keep in mind that if you do outgrow your space, you can always lease the premises to help with the cashflow. Or you can consider initially purchasing a larger space and leasing part of the premises to another business to help cover some of the overheads.

These are just some of the many considerations that will help you decide if buying or renting is right for your business. An attorney or financial consultant will also be able to provide more information that is more specific to your business needs.

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