Unless you’re a millionaire or happen to win the lottery, home loans are the most popular way of financing a home. Not everyone will get one, which leads some people to question whether it’s worth taking the plunge! So, should you commit to a thirty-year-long debt? Is it better to keep renting? Here’s why you should give it a go.
It’s An Investment In Your future
The first thing that you need to remember is that a home loan is an investment. Not only do you get a paid off piece of property at the end of it, but during the home loan period, your house generates equity. This equity is like savings and can be withdrawn in certain circumstances. I often use the example with first home buyers, if you pay $400 per week in rent, over 12-months you will pay $20,800 off someone else’s mortgage.
Assuming there are no major crashes in the property market, there’s a good chance your property will appreciate in value over time. When this occurs in conjunction with you repaying the mortgage, you’re building what’s called an “equity stake” in the property e.g. If you were to sell the property, and payout the mortgage, equity is the amount of $$$ you would be left with. Throughout the loan, you can draw on that equity for a number of reasons, some of which include consolidating debt, carrying out renovations, paying for a holiday, purchasing a large asset like a car and many more.
Can I Even Get A Home Loan?
All of this is very well and good, but can you even get a home loan? To be granted a home loan, you need to have a few things in place first:
- A stable income
- A deposit
- Proof of savings (Can be substituted by other means e.g. proof of good rental history)
- Proof of income
- Good credit record
If you have all of these in place and can afford the repayments on the loan that you wish to get, then a home loan is a good option for you.
What If I Lose My Job?
The first answer to this is don’t! Losing one’s job is a real fear in this day and age. There are several ways you can plan for and counteract this. The first is to set up a rainy-day fund. Save money in a separate account just in case something terrible happens. Be sure not to touch this fund and grow it as much as you can. You can also take out mortgage protection insurance. Several insurance products will cover your home loan payments should you lose your job or be unable to pay them for some time. Either way, if you’re properly prepared you needn’t worry about not being able to pay your home loan should disaster strike.
For broker guidance and home loan assistance, contact BlackBox Finance through submitting an enquiry in the contact us section below, calling us on 1300 70 12 17 or sending an email to email@example.com. Servicing Palm Beach, Currumbin, Burleigh Heads and the beautiful surrounding areas. We are your local Palm Beach Mortgage Brokers.