Helpful facts for understanding
peersonal loans with bad credit
Buying property with a Bad credit record
When I first moved up to Johannesburg and my career was just starting to flourish many years ago, I heard of and spoke to a number of people in a relatively short period of time with above average salaries who had lost everything and had to start over at a somewhat more mature age. I thought they were just stupid and never gave much thought to it, because it would never happen to me. Well, as Forest Gump says "It" happens.
What if the banks won't give me a home loan due to a bad credit record?
As I have mentioned before on my wealth creation site, I had a bit of a financial setback a couple of years ago. I am slowly recovering from that, but there's not much chance of a bank giving me a loan at this stage. I still have 2 judgements against me. However, it is possible to buy a property even with bad credit.
Installment Sale
One option is to buy a property through an Installment sale. This is not necessarily an easy option, but depending on your situation it could be the quickest way to get into the property market. With an Installment sale you need a third party to "give you a loan" and almost act like a bank for a period of time.
Basically, with an Installment sale you pay a certain amount extra for a property than it would sell for in the open market at this stage. Let's say Jack Flash wants to sell his house. He's looked at the market and believes he can sell it for R500,000. After performing a number of rituals including a 7 day fast, dancing naked on the hilltop and cutting off your left ear as a sacrifice, it has been "revealed" to you that Jack has recently won the lottery and has no immediate need for the R500,000, but just wants to get his money at some stage. Having looked at the property market in the area you believe that the value of the property will continue to rise and that it would still be worth your while paying R550,000 for the property. So, you go speak to Jack and offer him R550,000 for his property on condition that he sells it to you on an Installment sale.
With an Installment sale, the loan for the property remains in the name of the 3rd party, Jack in our example. The two of you then sign a contract that states that you are buying the property from Jack. You agree to pay R25,000 upfront, another R25,000 12 months later and a monthly Installment. This contract is completely legal and can be compared to the contract you sign when taking a loan from a bank. Generally there will be a clause that states that Jack may "take back" the property if you miss an Installment or x number of Installments. This is just to protect the 3rd party, who is really taking a risk in giving you a loan. This is true of any loan with a bank as well where they may re-posses the property if you fail to pay your Installments. Make sure you get a professional with experience in Installment sales to draw up the contract for you and explain the details to both parties.
There are two complications here. Firstly you need to ensure that it is worth buying the property at the higher value. It may seem that you are going to loose money if you pay R50,000 more for a property than it is worth. However, you need to look at the average property growth rate in that area and compare it to the current interest rate. Take a look at my explanation on
passive income. The following calculation is not 100% correct, but for simplicity's sake. If the interest rate is 10% and the property growth rate is 20%, it means that you'll recover the R50,000 within the first year even without taking the rent that you'll earn from the property into consideration. It means that you may not make as much profit as the next person, but it does help you to get (back) into the property market and work your way up from there.
The second problem is finding a person who is willing to sell their property on Installment sale. I don't know how you do this. Speak to a wealthy uncle or maybe a family member who qualifies for a second bond, but cannot afford the monthly Installment. You'll be surprised how easily banks give a second loan. If all else fails, do the naked dancing on the hilltop, listen to the wind and speak to your animal guide. Where there's a will, there's a way.
Clear your credit record
I know this is stating the obvious, but let me just say it. If you do have a bad credit record, you need to work out a plan of how to get out of that situation. It's so easy to get overwhelmed by financial mountains. You don't see your way clear to paying off that debt, so you just shove it to the back of your mind. Don't do this, the problem just escalates!! Go speak to a financial advisor and be honest about your situation. Ask them to help you draw up a plan to settle your debt and clear your name. Some of these guys are brilliant and know all the legal tricks to clear your name ASAP.
You also need to decide whether it makes more sense to settle your debt first or to buy a property while still paying off the debt. You need to compare the interest rate of your debt with the property growth rate, the interest rate of a bond and the rent you'll earn from letting the property. For example, if the property growth rate is 20% and the bond rate is 10%, but the interest rate on a credit card is also 20%, then it may be better to settle the credit card debt first. Do the math yourself.
An instalment sale is just one method of getting into the property market if you don't qualify for a home loan through a bank. My point with this article is that it is possible to get a home loan even when the banks tell you it isn't. The decision of whether you should buy a property at a slightly higher price and while you still have debt to settle is completely up to you and should depend, amongst other factors, on the property growth rate in your area relative to the interest rates of your bond and other credit facilities.
About the Author
Dirk Wessels is the owner and author of My Wealth creation website. You may freely distribute this article on condition that you keep this Author bio intact with an active link to my website.
More Useful Resource and Updates on peersonal loans with bad credit
- ANNIE'S MAILBOX: Taking daughter to court is one option to recoup loan (Lancaster Online)
Dear Annie: Five years ago, I had a mortgage of $15,000 left on my home. My daughter, "Jacey," wanted to buy a house, but her husband's credit was bad and she couldn't get a bank loan, so she asked me to take out a second mortgage and give her the money.Jacey was to pay $400 a month, and I'd pay the...
- If hard times loom and you have a home equity loan, consider tapping it out now. Withdraw all you think you ll need ... (San Jose Mercury News)
But in the new credit-starved economy, old axioms don't always hold sway. Of course not everyone agrees to an equity-grabbing approach, but there is a consensus among financial experts that your lender could take back your equity loan money if you don't get to it first.
- Predators target minorities (Chicago Sun-Times)
Dorothy Davis was sitting at her kitchen table in her Kankakee home when she felt water dripping. It was the roof. When a mortgage broker visited and said he could get a low-cost loan to cover home repairs, she signed on. And she was scammed. Davis is just one face of a portion of the mortgage crisis whose bad loans at one time helped feed the appetite of Wall Street investors.
- Loan Outlook Fair Despite Bad Economy (FOX 9 News Twin Cities)
With many financial institutions tightening their credit standards, some customers are left wondering if banks have any money left to lend.
- Financial Crisis Lays Fertile Ground for Lawsuit Boom (New York Times)
Nothing makes lawyers more popular than bad times, according to The New York Times?s Jonathan D. Glater.
- Door to a mortgage can be harder to open (Houston Chronicle)
The constricting credit market is no longer just a problem for entry-level buyers with bad credit
- Credit damage may be price of moving on (Bankrate.com via Yahoo! Finance)
Sometimes, damaging your credit is the lesser of two evils and necessary so you can move on, says Dr. Don Taylor.
- Bad Debt Personal Loan
Bad Debt Personal Loan - Debt To Total Asset Ratio - Debtscape, Debt Consolidation Debt Debt Management Credit Counseling, North Carolina Debt Collection ...
- Re:Loans Available-No Credit Required. - Home Loans - Australian ...
i am interested in a peersonal loan i need help thanks. By: banks_loanequity1. 27/07/2007 ... Do you have a bad credit or you are in need of money to pay bills? ...
- Personal Loans Guaranteed Approval Bad Credit
... Loans Guaranteed Approval Bad Credit - Loan Online Secured - Texas Bad Credit Car Loan, Countrywide Equity Loans, ... ppersonal peersonal perrsonal perssonal ...
- Bad Credit Get Loan Personal
... peersonal perrsonal perssonal persoonal personnal personaal personall personal ... Pennsylvania home improvement loan. Mall business administration loans ...
- Bank Personal Loan Bad Credit
... Personal Loan Bad Credit - Atlanta Georgia Interest Loan Mortgage Only - Georgia New Home Construction Loans, North Carolina Mortgage Loan Company, Financing ...
- Bad Credit Debt Loan Loan Personal
Bad Credit Debt Loan Loan Personal - Christian Consolidation Debt Nonprofit - Judgement For Unpaid Debt, Debt Advice ... loan personal ppersonal peersonal ...
- Bad Credit Home Loan Non Owner Personal
We try to provide the best information about Bad Credit Home Loan Non Owner Personal for you. ... Bad Credit Home Loan Non Owner Personal. February 2007. Sorry, ...
|
