| Motley Fool Personal Finance: Beware The Two-Tier Mortgage
If you dislike horror stories then please look away now, especially if you borrow money. That's because a two-tier mortgage market is just around the corner. According to the Bank of England, lenders scaled back lending to households in the last three months of 2007 as strains in the money market took its toll. The Bank's quarterly credit survey shows that households found it increasingly difficult to borrow money towards the end of last year. Unsecured lending, which includes credit cards, personal loans and car financing, fell. Worryingly, secured lending, which are loans secured against properties, also fell as a result of banks reducing their appetite for risk. The upshot is that some homeowners who are coming off fixed-rate mortgage deals may find it difficult to get new loans.
Need funds: Encash your home equity
When Nishant Sheth, a textile entrepreneur , was contemplating borrowing funds to expand his business, the first option that came to his mind was applying for a personal loan.
But he thought over this and had almost approached a bank, when his father asked him to reconsider.
His father suggested mortgaging the house where Nishant lived, pointing out that a loan against property would work out to be cheaper than a personal loan.
Nishant saw merit in his father's words and decided to approach the bank for a loan against his property. .
DeNaples' priest had deep debt
On a take-home pay of $880 a month, the Rev. Joseph Sica amassed debts of $218,000.
And he owed the vast bulk of the money -- $148,000 -- to a bank headed by his friend, Louis DeNaples, owner of Mount Airy Casino Resort.
How Sica qualified for credit cards, auto and personal loans on a Roman Catholic priest's income, and what he spent all the money on, are mysteries unaddressed by the bankruptcy court papers that document his financial hole.
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Manage your Debt Burden Smoothly
These loans seal the multiple shrinkage of borrower's existing income. The other appealing factor of these loans is the dealing with a single lender. Credit card bills, parent loans and other personal loans can be consolidated with these loan plans. The borrower needs to compare them to have the best deal. .
Bank demands EMI without a loan
Having to pay a loan installment without getting a loan sounds strange, that's what happened to a loan applicant in Hyderabad. Harassed and aggrieved the man has now filed a police complain.
Mohommad Bin Mahfooz applied for a personal loan of Rs 2.24 lakh from a leading corporate bank at Hyderabad in October last year.
He was told the amount would be dispatched within ten days. He never received the amount, instead Rs 8098 was deducted from his bank account in December as a monthly installment towards repayment.
Mahfooz said, ''I told them ECS has been cut, what to do? They said we can't do anything and you cancel the loan. We will deduct charges and return the amount. How is that fair?''
The bank says the loan cheque had been dispatched but returned undelivered and that they could not stop the EMI from being collected.
Thursday, January 24
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