It is not possible to get the best deal of financial assistance if you are not well informed about the applied conditions. With increasing prices of residential property all over the world particularly the UK, people have moved more towards financial assistance.
These days, you would not see people using their saved sums to buy a property. If you are living in UK, knowing about loan conditions, mortgage payments and property pricing would help you out. If you are running your own business than, it’s important to find out the weighted average cost of the capital of your firm before getting the finance facility. Wacc calculation is mandatory to carry out. The calculation of Wacc should be positive (business value based on its profitability) to make sure that you get your desired facility from your bank.
Calculate WACC of Your Business: WACC = (V E ×Ke) + (V D ) ×Kd× (1–Tax rate)
- E: Market Value of Equity
- V: Total market value of debt and equity
- Ke: Cost of equity
- D: Market value of debt
- Kd: Cost of debt
Financial Evaluation of your business is very important
It is not that easy to buy property. Apartments and houses are not purchased on daily basis so being careful is important. Mortgage is paid over the period of several years so financial evaluation is highly important. Consider an example to gain more understanding. If you have a volatile job, do not apply for a very large mortgage sum. Similarly, opt for a cheaper property if your monthly salary is on the lower side. Through financial evaluation, you get to know about your monetary standing.
Decide the mortgage percentage for your business
Most loan giving companies in UK require a minimum down payment of 20%. If the property value is £100,000, you would have to pay a minimum of £20,000 as down payment. The down payment percentage is a method to measure credibility. If an applicant is unable to pay even 20% of the amount upfront, it would be hard for him to pay the complete sum. 20% down payment is the minimum sum that has to be paid. However, if you pay off a larger percentage, the monthly mortgage payment would shrink down. Thus, if you do not want a lot of pressure for paying heavy sums on monthly basis, pay the maximum possible sum as down payment.
Use of an Online Tool
Most people applying for loans do not calculate the LTV before they submit the application. Loan to Value Ratio calculates the sum which would be taken as mortgage. In accordance with the results produced above, 80% of the total sum is being taken as mortgage. This means that 20% is paid as down payment. This is the maximum percentage which can be taken as mortgage. Loan giving companies reject applicants who have a loan of more than 80%.
Easy Process of calculation
You do not have to calculate loan manually. Using a loan calculator would make things a lot easier for you. A loan calculator is easy to use and anyone with basic internet knowledge can use it. To determine the loan, you have to complete the steps given below. The value of loan depends on various factors including the property price. Thus, once you open the link of the calculator, enter the property value. Apart from that, you have to enter the deposit sum. The minimum deposit payment is 20% but you can increase it if you have the financial strength. Paying a larger sum as advance has a lot of benefits. One of them is the monthly mortgage payment decreases. For any loan applicant, this is a big benefit. However, the paid advance depends on the financial condition of every applicant. It should obviously an aim at the maximum percentage of the property price is paid in advance.
Enter Mortgage Amount
The Mortgage amount is the sum which you need as assistance from the bank. In simple terms, this is the difference between the property value and advance paid. When all the input values have been entered, you only have to click the calculate button and determine the results. This would be the ratio of mortgage payment and total price of the property. On a maximum scale, it should not be more than 80%. Applicants who require assistance of more than 80% are not entertained by most loan giving companies.