Keeping Your Money Safe and Profitable Through Certificate of Deposit

Nowadays, there are several financial institutions that offer several kinds of services. With the economic ordeals that hit almost everyone, people who were able to save some money are being meticulous in choosing which financial institution to keep their money. Few decide to just keep it at home instead people will always look around for the best financial institution that will ensure their money is safe and earning the most. As much as there are numbers of financial institutions, the types of accounts that you can open also varies.

If you have a significant amount of money to save and you are confident that you will not need it for quite some time then you will be interested in buying certificate accounts. It is a type of investment with fixed deposit structure that you can acquire either from banks or lending institutions. Investors need to deposit funds in a certain timeframe which ranges from 3 months to sixty months or more in order for their money to acquire higher interest rates. Similar to the conventional savings account, certificate of accounts are protected and insured by government agencies.

Banks and credit unions have set specific minimum requisite amount of deposit for people who are interested in buying certificate accounts. Naturally, if you want your money to acquire higher interest rates, you should make higher deposits. In return for the deposit made, the buyer gets a certificate that indicates the necessary details to seal the agreement such as term of deposit, interest rate and the maturity date.

When the deposited money reaches maturity, the principal amount and the earned interest will be awarded to the depositor. In order for the banks and credit unions to keep their business through the number of clients retaining their deposits in a long term investment, heavy penalties are imposed to early withdrawals. Such penalties can be of different forms; either through interest rates earned on a quarter or it can be the overall interest rates for the whole duration of the deposit. It depends on which type of financial institution you deposited your money to. So as not to repel investors, some banks have introduced a different structure of certificate of accounts giving its investors the flexibility of making use of their money in a staggered basis so they can use it in some other purposes.

It is wise to look around before letting your money go to any financial institutions. You are not giving your money away, of course, but the fact that your money has the tendency to sleep with low interest, you might as well find the best options of saving and the best place to keep it. Identify your goals with their corresponding time lines in order to come up with a better decision that has been well thought of before buying certificate of accounts.

Unless you are truly confident that you will not have a need for the money you will be using to buy the certificate of account, consider finding other options that will not impose any penalties when withdrawing your money. Make sure to discuss penalties with your bank or credit union so you are aware of what you will lose in case you have to withdraw your money earlier than the maturity date.

Savings accounts San Luis Obispo can be found at top-ranked, local credit unions. Check into your different options at sites like http://www.coasthills.coop/.

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How to Get Help With a Property Deposit Through the Open Market Homebuy Scheme

Experts are warning that many will be disappointed with the UK Government's initiative to help first-time buyers on to the property ladder. The Open Market Homebuy Scheme allows those who qualify to buy from private sellers, as opposed to a housing association or other low-cost housing organisation.

The scheme works bt the Government providing a subsidy to reduce the initial costs of the mortgage and then the private sector mortgage lenders involved waive interest on part of the purchase price. However, the terms of the scheme are restrictive and the Government expects only a small number of buyers - around 20,000 per year - to qualify.

It works like this: A homebuyer selects a house in the usual way, but they only need a mortgage for 75 per cent of the purchase price. Of course they still need to demonstrate that they can afford the mortgage repayments. The 25 per cent difference is financed by two additional "equity" loans: one of 12.5 per cent of the purchase price from the private sector and another 12.5 per cent from the Government. Both these extra loans will be interest-free for the initial five years.

 

After five years, the private lender can charge interest but the Government loan remains interest free. Interest on the private lenders loan is is capped at 3 per cent until year 10 of the mortgage. But homeowners on the scheme have to pay 25 per cent of the sale proceeds from their home to the lenders when they move. This includes any rise in value ot the property.

So who is eligible to take advantage of this scheme? In theory, all first-time buyer can apply. Applications are vetted by housing associations, which issue what are called "eligibility certificates". The Government has said that priority has to be given to key workers such as nurses and teachers, as well as social housing tenants.

Buyers have to meet the scheme's rules as well as qualify for the mortgage. One advantage of the scheme is that applications are only assessed on the basis of the 75 per cent of the property's price as there are no interest or capital payments for five years on the remainder. The buyers do not have to find a deposit and there are no higher lending charges.

The drawbacks is that the scheme is complicated and may put offsome buyers. Not all mortgage lenders take part in the scheme and so the choice of lenders is currently limited to the Nationwide and Yorkshire building societies, HBOS and Advantage, which is part of Morgan Stanley. Buyers have to organise their main 75 per cent mortgage with the same lender that provides their equity loan.

One of the burning questions is what happens if property prices fall further?

If house prices fall and you sell the house at a lower price than you paid for it, the Government will bear its share of any loss, asking for 12.5 per cent of the sale price. Of commercial lenders, only Advantage will accept a reduced capital sum if house prices fall.

 

If house prices rise, and that could be some time off, then the equity lenders will demand their share of that rise. They will claim 12.5 per cent of the sale proceeds net of legal costs.

Michael Challiner is the editor for Brokers Online, one of the UK's largest finance sites. Visit Brokers Online to find out more about Home Insurance Quotes, Life Assurance Cover and much much more.

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