Whether you’re buying your first home or putting up your rental place, a mortgage is likely the biggest financial commitment you’ll ever make in your life so you will always want to do this right. Friends have talked about this finance option; some know the tides while others are just on with the hype. What I have come to understand is that the success or failure of this option is an individual’s understanding on how it’s either calculated or the risks involved. This is not just a normal loan you would qualify for; the amount of money you borrow comes with certain risks.
What risks should you consider?
Understand your future financial situation: So you got a job, a well-paying job and the next thing you think is, “It’s high time I get a mortgage”. With quite little thoughts in the risks involved and the future of ones finances, decisions are made and even bragged about on social media sites and public gatherings. This is the most unthought-of investments most millennials make, after a year or two their income wavers and then trouble sets in. Get to understand the risk of a drop on your income and how this should play along to your lifestyle. Are you planning to own other things, a car etc. within the repayment period? Cost such as repairs and maintenance of such automobiles will be weighing down your future income even further.
The potential for higher mortgage payments: Depending on the duration of pay this will always change based on the economic climate of a country and appreciation or depreciation of you home value over time. One has to consider this fact in order to plan ahead in time, invest in insurance products that will cover you from shocks like illness, education etc.
Mortgage brokerage understanding: If you are planning to enlist the services of a broker or agent to help you out. Please plan for the costing separately, these services isn’t for free and you have to trade carefully on this, get registered personnel to help you. Give them time to understand your financial present and future situations before advising on the best plan. Don’t rush them
Failure to do this then there are consequences
One will end up missing on repayments and thus damage your credit rating. Building such credits for investors takes time, unless you would want that to be the last loan you are taking. One will also end up paying more due to late payment charges. In case you default, the mortgage provider will never relent in selling your home and you find yourself losing everything.
In a nutshell getting a mortgage is an important decision and one has to think of seeking advice from a team of professionals, mortgage provider, financial adviser or lawyer, to help you with your decision. Never do it alone, it will push you to the poverty gap. Now you know…So the next time you think Mortgage think Risks!!
© Sabwa John Milton, 2018