“I have spare money of Rs. 2 lakhs. I was wondering if I should use this to partially prepay my home loan or invest it in Gold and sell the gold after 1 year at a profit and then prepay the home loan?” I was stumped when I received this question on a TV show recently.

I was stumped not because I did not have an opinion on the question but because of the sheer guts and exuberance of the questioner. After all he was so confident about the annual return from Gold being much higher (of course a positive return) than the sure shot saving of about 12.50% p.a. on his home loan. A little more questioning clearly elicited the fact that the viewer was your regular IT Professional who was a salaried person and certainly no expert or speculator on Gold. Clearly Gold has given such superlative returns since the last 4 years or so (see chart) that anybody could be forgiven for being carried away. However as the chart shows the annual returns for gold even over the last 4 years have been quite volatile. Dur

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If you are one of the many homeowners who has watched mortgage interest rates plummet but have been unable to refinance, changes to the HARP program may be your ticket to take advantage of today’s mortgage rates. While in some areas housing values are beginning to rise, approximately one in four homeowners still owe more on their mortgage than their home is worth.

HARP changes

While instructions to lenders about the HARP program will be given in mid November, applications for a HARP refinance may not be available until December 1^st or later. The program is scheduled to end December 31, 2013.

The biggest change in the HARP program is that there are no longer any limits as to how far underwater borrowers must be. In the previous rules of the program, homeowners could only refinance up to 125 percent of their home’s value. Now you can refinance an even higher loan-to-value amount.

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The Government recently announced a new proposal that will have an impact on how Logbook Loans are governed in the eyes of the law. The new rules have been implemented as part of the European Consumer Credit Directive and will come in force as of the 1st February 2011. These proposals that will soon come into force have been designed with one goal in mind, and that is consumer (in this case borrower) protection.

So what exactly will these new rules do?

1.A 14-day window for consumers to cancel credit agreements without penalty; 2.Lenders will have to assess consumers creditworthiness before providing a loan; 3.Lenders will have to clearly explain their products to help consumers make the right choices; 4.A right for consumers to make partial early repayment (this is in addition to the existing right to repay early in full) 5.

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The level of personal debt in the UK on things like unsecured loans and credit cards, as well as home owner loans and mortgages is still increasing at a dramatic rate, as many individuals are turning to the use of loans and credit to help pay their regular monthly bills through these difficult economic times.

Despite the fact that many people are trying hard to repay their outstanding loan and credit card debts, many people are simply unable to do so and are borrowing more, which inevitably leads them into the situation of missed repayments and loan arrears.

The latest figures from the loan debt charity Credit Action, have found that the average adult in the UK now has around £29,532 worth of loan debt and credit in their name, including balances on home owner loans and mortgages.

The figures also show that the average household in the UK has somewhere in the region of £55,795 worth of loan and credit card debt, including home owner loans and mortgages. I

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