| HDFC enters home equity business
MUMBAI: HDFC, the country's largest housing finance company, has made a big move in the home equity business by offering loans against property at 13.25%. This could turn out to be big business opportunity for the lender since most of its borrowers pre-pay home loans. The finance through the home equity route makes available finance at a cheaper rate than, say, auto finance or personal loans with easier repayment schedules. HDFC expects a big demand for this product from borrowers who have cleared their mortgage dues. This loan would also be available to existing borrowers, if the market value of the property is much higher than the outstanding home loan. The advantage of this loan over the existing top-up loans is that there is no Rs 5-lakh ceiling, which is applicable on top-up loans. Renu Sud Karnad, executive director, HDFC Ltd, said, "Asset Plus is not a new product from HDFC in the true sense.
Every extra dollar counts
Tens of thousands of dollars can be saved by shortening the life of a mortgage and most strategies do not require big changes, local lenders say. BankSA general manager Chris Ward said switching from monthly to weekly repayments was a great saver. "This allows you to match your salary cash flow and constantly chip away at the outstanding balance of the loan, and that's important when interest is calculated daily," he said. "For example, if repayments on a $175,000 home loan at 8.07 per cent per annum were converted from monthly instalments of $1369 to weekly repayments of $342.25, the total amount of interest saved during the life of the loan would be $58,979 and the loan term would be reduced by almost 5 1/2 years (for a 25 year loan)." This adds up to an extra month's payment per year.
Wells Fargo shuts its brokered subprime mortgage loan unit By The ...
The mortgage division of Wells Fargo & Co. said Thursday it plans to pull out of the increasingly risky business of issuing home loans through brokers to borrowers with blemished credit records. The move by San Francisco-based Wells Fargo, the nation's fifth largest bank, is the latest fallout from the decaying subprime mortgage industry which lends to people with spotty credit histories. As interest rates have risen and home values have moved sideways or even fallen in parts of the country, many of these borrowers have been defaulting. Wells Fargo ranks among the sector's largest lenders but has been relatively unscathed so far by the implosion that has led to the closures or bankruptcies of more than two dozen subprime lenders since late last year.
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