Capital Business Finance

Refinancing is a common practice adopted mostly for home loan facilities.  Refinancing is nothing but to pay off the old debt and taking a new one.  The major reason for refinancing is to reduce interest rate.  Reduced interest rate is nothing but less to pay every month and thus increase in the monthly income at hand.  Refinancing happens all over, the only point to be taken into consideration is the right time to take refinancing options.

There are many reasons for refinance, the major ones according to Fanniemae being a. To reduce the interest rate. b. To build equity faster c. Change the loan type to one that is more feasible and more attractive. e. Improved credit rating. F. To draw equity on home that is already built.  The major reasons are only two and that is to reduce interest and to increase the equity.  The interest rate again depends on the discount point, which you can produce at the time of refinancing.  For example if the interest rate is 7% then with a discount point the interest rate reduced to 6.75%. .  With the array of different types of lenders and brokers, the borrower is at an advantage to choose his lender according to the interest and various schemed offered to him.

The various eligibility for applying for refinance depends on various factors like, how much is the existing mortgaging amount.  For how long is the refinancing facility. How many years is the mortgage left?  What would be interest amount saved etc., While applying for refinancing facility the lender always checks various details of the borrower like e.g., the source of income for the borrower, his credit rating, if  a mortgage exist then what is the amount of mortgage, the term of the mortgage.

Therefore the advantage of refinancing depends on the reduction of the interest or the lesser money he has to pay towards mortgage, the costs involved towards refinancing and how much the borrower is able to save money over the life of the loan.  Costs plays an important part and the borrower has to see to it that the costs involved is not more that the mortgage left to pay.  Thus refinancing is an boon to the borrowers particularly in the US where the array of lenders and brokers can give a borrower a good deal.

When looking to get a new credit card, there are many things to watch out for. Whether this is your first card or you’re simply looking to transfer your balance of an old card onto a new one, there are many items you’ll want to beware of, including how long your 0% interest will be. One of the main issues of transferring your balance is what happens when you apply purchases onto the same credit card you transferred a balance on.

If you are in the market for a credit card to transfer a high-interest rate balance, there is one particular thing you’ll want to watch for. For example, a credit card company may claim to have a 0% interest rate for 6 months on a balance transferred from another card. This, in fact, is quite common. However, the catch is simple when explained.

Use this card for any purchases and you’ll be paying an interest rate of approximately 16.9% interest on your purchases. The 0% interest does not apply to any purchases you normally use a credit card for and if you have your transferred balance on the card, as well as purchases, your repayments will go toward paying off the balance transfer first. Therefore, you’ll be accruing interest on the purchases and have no way to repay them unless you pay off the balance transfer first.

Unfortunately, this is why the majority of these companies offer cash backs and rewards. They want you to put purchases and increase your balance. In this particular case, they make a lot more money from you, while you spend years trying to pay it off.

Does this mean this is the death of the 0% balance transfer offer? No, it does not. To get around this, you’ve simply got to be aware of the fine print within each particular programme. If the offer states that it is 0% interest on balance transfers, cheque for how long it will remain 0% and what the interest rate will be once the time is up. You’ll also want to know and evaluate what the minimum transfer balance is. Most credit cards are approximately £100. You must decide at this point if you believe the balance will be paid by the time period is up and if not, can you handle the interest rate.

The next step is to keep this card only for this balance transfer. Do not put any purchases or draw any cash from this card, no matter what kind of offer they give you for rewards or cash back. If you can do this, the 0% balance transfer will be beneficial to you.

Another thing to watch out for on credit card offers is if there is a handling fee. There are some companies that will charge a one-off 2% fee for balance transfers and they also put a minimum charge of £2 and a maximum of £50. While there are still some offers that will not charge a handling fee, they are becoming rare.

When looking to use a credit card for a balance transfer, it is very important to read the fine print on each and every offer before you make a decision. Look at what the interest rate will be and after what time period, as well as any handling fees involved. Evaluate each 0% balance transfer offer and go with the one you feel would work best for you.