Is a 100% home loan a good thing for you?

There are a number of things to consider before you take out a 100% or 105% home loan. Borrowing 100% or 105% of the homes value can be a great way to get in your first home. But there is a downside, generally the interest rate is considerably higher than what it would be if you had a larger deposit. Here we look at 100% and 105% home loans and how they can benefit you and also some of the pitfalls of taking out such a loan.

What is a 100% home loan

Loan valuation ratio (LVR) is calculated by dividing a loan amount by the property's value. For example if you have a $800000 home loan and your home is worth $1000000 then you loan valuation ratio is 80 percent. So, with a 100% home loan you are borrowing 100% of the home loans value, meaning you need no deposit. Generally loans with a higher LVR command a higher interest rate.

Lending organisations encouraging debt

Many lending organisation may be very willing to provide you with the funds to get you into your home by lending you 100% or 105% of the total value of the home. Lenders today are often criticised for lending excessive amounts in the fear that home buyers cannot sustain such high debt levels. Should interest rates rise, home buyers with significant levels of debt could face the prospect of the bank foreclosing on their house. Each lending institution has its own criteria for approving debt levels, depending on which lending institution you apply for you may find you are approved or disapproved for a 100% home loan.

How to Play the Balance Transfer Game Successfully

Do you have heavy credit card debt? If so, you can save some big money by taking advantage of credit card balance transfers. With balance transfer credit cards you can take advantage of teaser rates that are offered several times each year by major credit card companies. Teaser rates are usually good for three to six months after you receive the card. Rates can range from 0% to 9% and they are beneficial to credit card holders who have large debts on credit cards with higher interest rates. By transferring the balance from the high interest card to the teaser card, you will save big money on interest.

The Benefits of Business Credit Cards

Given the variety of business credit card programs available, anyone with decent credit should seriously consider one. Although intended primarily for small business owners, the offers combine every kind of credit card contract. Business credit cards are available with low interest rate, zero introductory interest rates, balance transfer options, rewards (like frequent flyer miles or cash back), and on and on. Business cards often offer travel discounts on cars and hotels, frequent flyer miles, travel insurance, even restaurant savings.

Pre paid credit cards

During the 1990's credit card companies had to look at a different means of securing their debts because of great losses. At that time they came out with the secured credit card and following close behind came the prepaid debit card. Prepaid credit cards are issued by most credit card companies, such as Visa, American Express and Mastercard. In this instance, funds are added to a prepaid debit card at a retail location or through an online bank. The prepaid card works very much like a prepaid phone card. Basically, a prepaid credit card is cash that has been applied to a plastic card so that the funds can be accessed electronically. These cards are set at a limit that is identical to the amount deposited. Each time you use the card, the amount on the prepaid debit card decreases until it reaches zero funds.