How Recession Affected Balance Transfer Rates

Much has been said about the recent UK recession, with businesses tumbling and individuals feeling the pinch of more stringent spending budgets.

Like many other industries, the recession has had a dramatic effect on the credit card industry, which has racked up billions in losses amid a sharp increase in the number of people who can't pay their bills because of a job loss or other financial hardship. That, in turn, has had a ripple effect even on some credit card customers who have always paid their bills on time.

In order to adapt to the drastically changed economy some credit card issuers have raised interest rates substantially, causing in some cases to double or even triple the total minimum monthly payments. Reports of people receiving letters from their credit card lenders about an increase in interest rates have been well documented in the recent months.

As many customers started to re-examine their day-to-day finances, with debt consolidation being one of the options, switching current balances to other issuers offering 0% balance transfer cards seemed like a most sensible solution. However, due to recently introduced new government legislation aiming at protecting the credit card holders, the outcome may actually cause balance transfer credit cards to lose their appeal.

The reasoning is the following: while companies will have to adhere to the new rules protecting the customer they will also look for ways to recoup lost income. For instance, some companies have already cut the length of their balance transfer offer from 16 months to 14 months or shorter, with many others to possibly follow. The future increase in fees and interests also seem inevitable.

Customers should shop around for the best available deal and check if benefits gained from a lower interest far outweigh initial set up costs. Things to look out for are: transfer fee (usually around 3% of the Home Loan Balance Transfer), a typical 16.9% APR for ongoing purchases and even more on cash advances.

Are there any other downsides to balance transfer credit cards? Although it's highly advisable to consider some other alternatives like debt consolidation or personal loan, credit cards balance transfer still remains the best option to curb your debt. It's not ideal but very often can do the trick. The only thing to remember is that 0% rate lasts for a limited period of time and the balances should be paid off quickly.

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

[Source: http://ezinearticles.com/?How-Recession-Affected-Balance-Transfer-Rates&id=4412082]

What is Seller Home Loan Balance Transfer, how to do it?

 Customer has stuck with his home loan process when he came to know that the seller is having a home loan on the property and he is not having the funds to pre close it. As Mr. Naveen many customers don’t know how to resolve this situation and find themselves in a dead end, but banks do have a product for those who buy properties from owners with home loan already on the property and the product is termed as “vendor liability” or “seller home loan balance transfer”

The process is same as like a normal home loan where the applicants submits the personal, income and property documents along with additional documents like vendor loan account statement, outstanding letter and List of documents deposited in the bank. The process will be done by verifying the personal and income details of the applicants. The panel advocates verify the legality of the property by scrutinizing the documents and by verifying the details in sub registrar offices.

Once all the verification are positive banks start the process of disbursing the loan by collecting checks and signatures on home loan agreement. Banks first disburse the outstanding loan amount of the previous bank in which the seller is having a home loan. Banks gives the owner the complete responsibility to bring the original documents back and register the property to the purchaser. Once the property is registered in the name of the purchaser the remaining loan amount will be disbursed to the seller.

The process of Seller home loan balance transfer is same as like a normal home loan balance transfer with one small difference i.e the process gets completed in 15 days where in normal home loan BT gets completed in week days of time. Banks offer same home loan interest rates for seller balance transfer cases as of a normal home loan and these home loans are also covered for Income Tax benefit Under Section 80(c) of Income Tax Act.

[Source: http://myloandetails.blogspot.in/2014/09/what-is-seller-home-loan-balance.html]

Home Loan Prepayments - Some Important Points

The high home loan interest rates have forced the borrowers to think of prepayments. However, prepayment of home loans shouldn't be just done impulsively. There are a lot of factors to consider before making a decision to prepay a home loan or not. Here are some basic things to consider.

Factors to consider before prepayment

The current financial situation of the borrower: Is there enough money floating around to prepay the home loan?

How much money is needed immediately or in near future: Does the borrower have enough money to meet financial exigencies?

The home loan interest rates: Are they likely to rise, remain at the same level or fall?

Are there investment options available which can give better returns (of course with minimal risks) than the current home loan rates?

Important points

Always calculate the total amount you have to pay to the bank. This included the home loan interest with the principal. This will give you a clear idea on the amount of money you owe to the bank.

If you are planning to invest the money instead of prepaying, calculate the total earnings by investments over the entire duration of loan amount. Always deduct the tax liabilities so as to reach exact figures. If subtracting your Home Loan Balance Transfer

from the gains from investing, provide a surplus amount; it is always better to invest your money.

Prepayment penalties are also to be paid to the bank if you are not able to provide proofs that the money you are using to prepay is from windfall gains or your own. (People generally use Home loan balance transfers and get the money from other banks. In such cases banks will charge prepayment penalties).

If your home loan tenure has stretched substantially due to the increase in interest rates, consider making part- prepayments if your situation permits to keep the home loan tenure to the same levels.

[Source: http://ezinearticles.com/?Home-Loan-Prepayments---Some-Important-Points&id=1424995]

How to Transfer My Home Loan?

Due to a high disparity between interest rates for existing and new customers, several home loan customers are unhappy with the high rates they are being forced to pay. But when banks start discriminating between you and its new customers, it’s time for you to transfer your home loan to a lower interest rate and save money!

Step 1: Cost Benefit Analysis

Analyze your situation, after which you will be able to decide the viability of transferring your home loan. Here are a few broad guidelines that will help you:

 If your home loan is on a fixed interest rate, then you will have to pay a pre-payment penalty to transfer your loan. In this situation it is not advisable to transfer your home loan.

But if you have a high floating interest rate, then transferring your loan to a lower interest rate will be beneficial.

If you have a home loan with long repayment tenure, then transferring will benefit you, as a longer time-period implies higher benefit.

Step 2: Get NOC from Bank

NOC HOW TO TRANSFER Next step is to get an NOC (no objection certificate) from your bank along with:

Foreclosure letter

Your payment history and

List of your documents that the bank has

This process may take 1 – 3 weeks, varying from bank to bank.

Step 4: Credit Approval

Loan approval

The bank will now evaluate your application and decide your eligibility status. It may ask you a few more questions as well.

This is a time taking process as different banks have varying requirements of documents. This process may take 3-4 weeks, varying from case to case.

The bank will carry out extensive background checks on you before they give you a credit approval.

Step 5: Documentation with Chosen Bank

Document verification IN the final stage, you will need to complete the documentation process with the chosen bank. Both, your old and new bank will have a specific requirement of set of documents to complete the switching process.

A catch 22 situation arises in case of Home Loan Transfer to the new bank as the old bank will release your documents only if they get the cheque for the balance principal amount and the new bank will release the cheque only after all the documents are submitted to them.

To solve this, a meeting is held between representatives the two banks. A cheque of the balance principal amount is handed over to the old bank, following the hand-over of your loan papers to the new bank. This ends the transfer process of your home loan.

[Source: http://www.switchme.in/blog/2013/12/how-to-transfer-home-loan-switch-banks/]