HELP I NEED MONEY FAST

The well-known American comedian and actor Bob Hope had the following satirical saying about a bank:

"A bank is a place that will lend you money if you can prove that you don't need it"

Unfortunately, most of us do not have the luxury to make such statements nor to take such witty remarks too lightly, because the issue of getting your hands on funds, just to survive your day to day struggles, is a very serious matter. Only the very rich, those who don't need money are unaffected by the hassle to fund things which are necessary for your own survival and your dependents. This article will provide you with pointers on the best options available for you when the need to fund something, arises.  It will look specifically at the choice of a mortgage as opposed to other types of loans to reach the goals that you have set for yourself.

Different Types of Loans

The word mortgage comes from the original Latin word "mortuus" which literally means death.  The word was later adopted into previous versions of the French language as "mort", and joined with another French word from the same period namely "gage" which simply means undertaking or agreement. These words referred to the long-term nature of mortgages and ironically accepted the nexus between death and the duration of the agreement.  It was therefore accepted as an agreement which lasted until the death of the borrower. In the English language, the word "mortuus" is also reflected in words like mortal and mortuary.  Before we become too depressed about this type of loan let’s look at another amusing statement about the need of mortals to have access to money. Famous American writer Helen Gurley Brown released the following wisdom about this:

"Money, if it doesn't bring you happiness, will at least help you be miserable in comfort"

A mortgage is only available if you want to buy immovable property in short known a house, including an apartment or any other type of housing facility where you can be registered as the owner.  Business premises and factories can be bought in the same way.  A mortgage is, therefore, a loan provided to you by your bank or similar institution to buy that property you know will make your life so much more comfortable.  With the quicker pace of modern life and the fact that properties exchange owners far more often than in the past a mortgage is, by no means today, a liability that you accept until the day that you expire.  The loan is usually granted for a period of between 20 to 30 years, at the end of which all money due to the bank is expected to be paid.

There are considerable variations in the terms and conditions available which leave ample scope for you and the bank to reach agreement on the term of the loan, the applicable interest rate and whether a deposit will have to be paid.  These factors are also influenced by prevailing economic conditions.  If you are in a position to add a deposit it will lessen the burden of your repayments and will be to your advantage.

Your installment is the amount that you pay to your bank to cover both the capital of your loan and the interest and costs thereon. Interest rates may be fixed for the period of the agreement or may be variable according to market-related rates. Both have advantages and disadvantages.  From the banks' point of view, a mortgage is the most secure loan that it can advance because the property attached to the loan can be appropriated if the borrower is unable to meet his liabilities.

Other types of loans stand in contrast to a mortgage. There are again several types. The one other loan agreement where a form of security is applicable is an agreement for the payment of a loan secured by the assets purchased with the loan. Elementary examples are the purchase of a vehicle or furniture. These assets only become the property of the borrower of the funds when the agreement underpinning the loan is paid in full.  Other types of credit which can be mentioned in this regard are personal loans, credit cards, and accounts at various businesses.  Most of them have variable interest rates and in some cases, security may have to be produced in order to get the loan advanced. 

Different types of loan include:

• Personal loan: This type of loans can be used for any purpose, also these are unsecured loans, which means there is no need of collateral.
• Auto loan:  just as the name suggests, this type of loans are associated with purchasing cars. These type of loans are issues when you want to buy a car and the car acts as collateral.
• Student loans: these type of loans are meant for students and issued by both government and private lenders.
• Credit builder loans: These types of loans are created for improving poor credit scores. Usually, the lenders put an amount in your account, and you need to pay them back over a period of six to 24 months. Repaying the amount within time improves your credit score.

There are several other types of loans as well. However, these are some of the primary ones.

Principal Differences Between Mortgage Loans and Other Loans

As a result of the considerable security attached to mortgage agreements, these loans are easier to obtain and more importantly, carries a lower rate of interest.  The only downside to this good news is that you must own immovable property or qualify to do so before a mortgage will be advanced to you.

The other set of credit agreements may also involve the provision of security but in those instances, the security is of a lesser secure nature. No wonder then that in different ways the interest that you are obliged to pay on the loan varies at higher levels than mortgage agreements. The highest rate of interest is payable on credit cards and shopping cards, with personal loans at a slightly diminished one and agreements for the down payment of assets yet lower but still more than for a mortgage.

Your Mortgage as a Starting Point, Always the Best Option

By using your existing mortgage as a source of funding you can save considerable money but there are conditions attached to this statement.  A mortgage is usually flexible in the sense that your bank will look at the extension or re-use of your mortgage amount if your payments justify this.  This will all depend on your credit profile, to which we will come shortly. Hypothetically if you have paid a substantial amount of your mortgage capital, or have made additional payments to a sizable degree the bank will re-advance you all or a lesser amount of capital paid.

Consider the following options:

• On every occasion that you pay additional funding on the capital of your mortgage, the outstanding balance gets reduced by a noticeable degree. The additional payment of your annual increase, your bonus or any other amounts which may come into your possession will not only reduce the capital owed, but also the interest that you are liable to pay. So, the payment of the capital at a faster rate will, without any doubt, save you considerably on the payment of interest.
• A second scenario is that after paying off such increased installments you may be faced with the need to obtain further funding. You are now confronted with the choice to obtain a new loan agreement or to use the available funding in your mortgage to obtain the required credit.  A new loan will carry more interest as we have indicated above while the use of your mortgage will allow you to obtain the credit at the same low level applicable to this type of agreement, as the security of your property remains in place. You may be able to save half of the interest that you would have paid on another type of loan when you follow this route. The only pre-condition which you should adhere to strictly to assist your own financial affairs, is that you pay the amounts borrowed in this way to buy for example a car, furniture or cover an emergency in the same time as an agreement for the payment of an asset or a personal loan in the case of an emergency. Otherwise, you extend the period for the repayment of the capital on these assets. The interest that such a step draws, may well turn out to be detrimental as it increases the payment of interest over a period of time tremendously.

Improving your Credit Ratings

Remember that your credit ratings play a deciding influence in the way you can manage your financial affairs. Keep up with your payments, be open and honest with your bank and deal with situations where you find yourself in trouble. Your changes of steering through the maze of situations that may confront you then become more than just a dream.

Conclusion

When you are confronted with the need to obtain additional credit the question as to whether you should take a further advance on your existing mortgage or attempt to get a different form of credit, will have to consider carefully. At first glance, it may appear that taking out a further advance on your existing mortgage would be the preferable selection. In some cases, depending on your personal circumstances this may not be true. Some knowledge of these instruments is indispensable for you to make an informed decision.  Speak to the representatives at your bank who will be able to assist you with guidance.

We conclude with a cynical remark by the famous British author and playwright Oscar Wild:

"Anyone who lives within their means suffers from a lack of imagination."