The internet was the gateway to globalisation, and its appearance
paralleled other huge leaps in technology. Before the end of the
decade we would all be surfing the web and calling our friends
and colleagues with the latest mobile phones. In the financial
services sector, however, little changed. Okay, in recent years,
we have been able to check our accounts online and even pay our
bills through secure websites, but we still largely rely on our
local high street banks or building societies for everything from
managing our day-to-day accounts to securing a loan or mortgage.
But things might be changing.
According to latest proposed amendments to the Consumer Credit
Directive, consumers will soon be able to search the whole of
the EU for the best loans. By applying a new standard format to
calculate interest rates for loans and credit cards, EU diplomats
and officials hope that consumers will be easily able to compare
rates and secure EU loans without compromising their consumer
rights. This will be supported by strict rules on the minimum
level of facts and figures that must appear in advertisements,
and the information consumers must be provided with when applying
for credit.
When you file your income statement, the interest you pay to purchase
your principal residence is deductible. In fact, you can even
purchase additional land through home loan lending and claim the
residence interest as a deduction. The only condition is that
this land be adjacent to your home. Furthermore, you can declare
as a tax deduction the interest on as much as $100,000 of your
home-equity debt. The good thing about this is that even though
you use the borrowed money to go on vacation or a shopping spree,
the Internal Revenue Service, or IRS, won't care. as long as your
house has the equity and this equity secures your debt. Home Loan
Lending Helps You Save on Taxes Taxes give everyone headaches,
especially when it's time to pay or compute them. Home loan lending
can make the headache throb just a little less painfully, however.
When you purchase a house, you can declare all the real property
taxes you pay as a tax deduction. You can do the same even if
you are only a tenant shareholder in a cooperative apartment building.
You can declare your share of the property taxes paid as a tax
deduction.
There are potential challenges, however. Some banking organisations,
such as the British Bankers’ Association and the UK Payments
Association (Apacs) agree to the changes in principle, but are
concerned that the infrastructure isn’t in place to make
it work. For example, each member state has different privacy
and debt recovery rules. In addition, there is no agreement on
how much compensation banks can demand from clients who repay
their loans earlier than agreed.
As a consumer, you may also have some reservations about securing
a loan overseas. The advantage of going local is face-to-face
contact or at least an easy phone call. With EU-wide loans, there
may be language problems or limited personal contact. You may
also be unsure as to whether the rules and regulations you understand
in the UK market would apply to loans taken overseas.
These developments are still new but vast differences in interest
rates between countries across the EU could give you the chance
to make huge savings in a loan deal. But you also need to ensure
you thoroughly research this new and changing market. At present
cross-border consumer credit accounts for just 1% of the European
total - this percentage is likely to grow in the next few years.
If you want to be part of this brave new world, just be sure to
do your homework first.
