With this post, at SEattle Meditation we want to give you some recommendation to invest your money during this year. 2013 has started with the same economic uncertainties and, even more so, political ones.
The shadow of the rescue is hovering over our heads, the VAT (which stood at 21%) threatens to rise, the unemployment rate reaches six million and those affiliated with social security continue to decline. In this 2013, the taxation on housing has radically changed: the deduction for purchase ends and the VAT rises from 4% to 10%. The " Bad Bank " raises uncertainties about its operation, the stock market accelerates its falls and rises ... That is, unfortunately we have little favorable news to get out of the crisis .
Faced with this financial storm, what can a saver / investor do ? Fortunately, there are still numerous alternatives , from lower to higher risk, of complete liquidity to immobilize our money for longer ... All these options will have to be analyzed together with their pros and cons and take them into account before making any decision.
In this blog we always inform the investor about the most common products that exist, such as paid accounts and deposits, government debt, stock market, investment funds, other currencies, gold or housing / real estate. On this occasion, we will allow ourselves to report in more detail about the characteristics offered by the star product of our platform: loans between individuals with a mortgage guarantee .
1#. What are home-equity loans and how do they work?
The Loan between individuals is an act in which the action of lending is used instead of depositing, buying or investing in a product with a known profitability. This action of lending allows the saver / investor to obtain a return according to what he understands the value of his money within established parameters so as not to commit an act of usury. These values can be applied directly and can range from 8% to 24%. They are free, real and can be applied according to the situation of the selected operation.
The action of lending is comparable to the action of putting money into a deposit, buying shares, currency, gold, etc. The guarantee that this act has been carried out correctly is determined by a notary and a public deed that identifies the characteristics of the loan, as well as the guarantees that are incorporated. Therefore, when we carry out an action to lend correctly we are saving or investing our money with high profitability and total legal security .
2#. What guarantees are there?
The most important thing to enter the world of loans between individuals is to have sufficient guarantees to secure our money. On our platform we load our database with real estate properties of loan applicants who put a guarantee in exchange for an investor to lend them money . The most interesting thing regarding the guarantee is that added to its high profitability the investment does not exceed in 99% of cases 30% of the appraised / market value of the property presented. This guarantee will be subject to a mortgage that reflects the investment made. This would mean that in the case of breach of the contract by an applicant, the result of the legal action derived from his claim would be, or the return of the borrowed capital plus the ordinary interest plus the default interest or the award of the guaranteed property in judicial auction. Therefore there are only two paths that exist in loans between individuals or high profitability or property .
3#. How can an investor value the guarantees that are presented?
As an investor, the concerns that arise in a transaction between individuals are mainly focused on the documentation and the valuation of the guarantee. In these cases, the documentation that an applicant presents must be verified giving faith that it is authentic and that it is related to the guarantee provided. As regards the current value of a guarantee, what better than an appraisal company certified by the Bank of Spain to value what is being offered? Data such as the Simple Note to verify ownership and existing charges, property deed, pre-appraisal, cadastre and IBI are documents that an applicant can present and that a manager or investor has to verify for the valuation of their operation. At SEattle Meditation, a manager assigned to your operation is in charge of checking and informing the investor that this documentation is correct and truthful. Finally, by means of a notarial protocol, all these procedures are carried out by drawing up the agreement between the parties in public minutes.
4#. Who guarantees the return on an investment?
One of the taboo questions when it comes to investment (not only in the subject that addresses us, loans between individuals , but between any type of investment in the stock market, funds, currencies, etc.) is when my investment returns and what there is security in it .
What we want to clarify is that an investor will always have a return on their investment . In business between individuals there are no bankruptcies, bailouts, or balance sheets. The only factor that affects you is the value of the home, but still, will the home go down to 30% of its value? An applicant for financing between individuals knows perfectly the pros and cons of the operation that is signed. Does an investor know all the factors that affect him in the stock market, funds, currencies? A broker or financier whispers the benefits of managing your money with an average return of no more than 8% in many cases and in that case they will tell you that obtaining returns above that percentage is impossible or it may simply be a scam.
What is guaranteed in a contract between individuals is that there is a commitment in time and amount and that if that commitment is not fulfilled, the amount to be returned suffers interest for late payment and in case of not complying with the agreement, a embargo. So the ball always remains in the home of the borrower, not the one who invests in it.
5#. Real estate: buy or lend?
Undoubtedly, housing has been the most affected, at least in the first months of the year. Without a tax deduction for your purchase and with the VAT of the new house at 10%, it will lose its attractiveness, but the housing stock is still huge and we have a new active operator: the “ Bad Bank ”. What could happen? Most likely, as the months progress, the purchase will be more incentivized by lowering prices, so the outlook will improve as we progress through the year. This is a theory that economic analysts are presenting , who lately are doing futurology courses because in reality the one who has the power to make a private person buy is the bank , and without a bank it does not give you financing, you cannot buy. To that we add the competition from the “Bad Bank” and its housing stock and the picture is complicated. As a result, a property is no more interesting as an investment.
6 #. Defaults, evictions, platforms and others
Many of the investors who intend to lend to individuals have in mind as the worst case scenario, the default, execution and auction of the guarantee provided. If the entire process is carried out from a legal and responsible framework, the applicants do not accept the alleged injustices of the mortgage law, therefore, the claimed debt is fully settled with the auction and adjudication of the property. Therefore, it is an exercise of responsibility that the request for financing entails an obligation in its liquidation, so contracts between individuals are completely opposed to the problems that today arise from mortgages, evictions and platforms since These problems are derived from the banks and their abuses.
Finally, we remain at your disposal for our managers to inform you in more detail and at a particular level if necessary about the benefits of investing between individuals.
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