| Secured homeowner loans – An added advantage
Taking a loan against your home is a traditional and time-tested way of borrowing money. This is the only way that allows you to borrow large amount of money. Otherwise, lenders do not sanction a large amount. The equity that your home holds in the market is taken into consideration before sanctioning any loan. The maximum loan to equity ratio is usually 100 per cent. It means that if your home has a value of £250,000, you may get a loan of an equal amount. In the prevailing circumstances in the UK financial markets, lenders have been badly affected by the global credit crunch. Their cost of borrowing has increased and, therefore, the lending rates are also going in the upward direction. Many lenders have even withdrawn unsecured personal loans from the market. However, if you have a good credit history, you can easily get better interest rates on secured homeowner loans.
JP Morgan loses $1.5bn on risky mortgages
JP Morgan Chase & Co's quarterly profit fell a worse-than-expected 24 per cent as the bank lost $US1.3 billion ($1.5 billion) on risky mortgages and set aside more money for rising losses on home-equity loans. Investors, however, rewarded JPMorgan for turning a profit while some US banks post huge losses from bad bets on subprime mortgage-related securities. JPMorgan shares were up 7 per cent in afternoon trade. JP Morgan chief executive Jamie Dimon was bearish about consumer credit quality, but he said rough financial markets made it more likely the bank would make an acquisition. Still, JP Morgan has significant exposure to cash-strapped US consumers who face higher energy and food costs while they watch the value of their homes slide. "Though the numbers were slightly weak, you have to give Jamie Dimon credit for avoiding most of the problems that have plagued his competitors," said Thomas Russo, a partner at Gardner Russo & Gardner, where he helps invest more than $US3 billion.
Ready To Consolidate That Debt?
IF YOU'RE A homeowner saddled with debt (and we're talking about bad, high-interest debt like the kind you pile up on credit cards) then Alan Greenspan has offered you an escape route. How so? Well, while credit-card interest rates have become increasingly immune to Fed rate cuts (with the average fixed-rate credit card now charging 13.5%), home-equity lines of credit, or HELOCs, have fallen below 4.0%. That's one of the lowest rates we've seen since these products first became popular back in the mid-1980s. And better yet, that rate is before you consider the tax break on your interest payments. Indeed, from a pure number-crunching perspective, consolidating high-interest, nondeductible debt into a HELOC or a home-equity loan, or HEL, is a no-brainer. Of course, your home is the collateral for such a loan, and foreclosure could leave you bunking down in Mom's den.
|
