Borrowing money to buy a home is a solution often applied to many middle-class families. With the middle income between the economic growth is too fast. Especially in the central areas. Borrowing money to buy a house helps families soon own their dream home.
Borrowing money to buy a house: Should you borrow money to buy a house?
Borrowing money to buy a home is really a solution to help many families. Only partial collateral is required and a reasonable income statement: Many families can get a home loan from banks and credit unions.
Borrowing money to buy a house helps families soon own their dream home. While there is no need to go through a long waiting period. They can borrow money to buy a house, then gradually accumulate money and pay the bank. During that time, they still enjoy the conveniences that the house brings.
What home loan experience to remember?
You should only borrow money to buy a house up to 50% of the value
Before deciding to borrow money to buy a house, you need to own an accumulated amount. This amount should be worth at least 30% of the value of the house you want to own.
However, the ideal loan amount offered by financial consulting firms is 50% of the house value. That means you need to own half the value of the house before deciding to take out a home loan.
The lower the loan amount, the lower the payment pressure will be. At the same time, the loan interest rate will also be lower and the risk of default will also be significantly reduced.
If the bank loan is too high, the pressure to pay interest is also high. At the same time, borrowers to buy houses will not be able to guarantee their standard of living.
Pay attention to calculate home loan interest rate
Borrowing money to buy a house should pay attention to bank interest rates. This is an experience that everyone needs to memorize. Why is that so?
Remember, currently in the market: Many banks and financial consulting companies have many preferential lending policies; These policies have relatively low interest rates on home loans: The highest is only 8% per year.
However, it should be known that this is a preferential interest rate that applies only up to the first year. After that, this interest rate will be adjusted up from 3.5-4% depending on the bank.
Therefore, before signing the loan contract to buy a house: It is necessary to ask the consultant to clearly state the interest rate each year; At the same time, it is important to know whether the loan will be calculated according to the initial loan balance or the decreasing balance.
Guaranteed to maintain a stable monthly income
Before taking a loan to buy a house, it is necessary to base on a stable monthly income. This will help the borrower minimize unnecessary risks. Avoid default due to overpayment.
When you have borrowed money to buy a house, it is necessary to balance income and expenditure properly. To both ensure full payment of principal and interest to the bank; It is also possible to ensure a standard of living for the family.
Consider looking for ways to increase revenue and reduce expenses and save money to prevent unforeseen problems. Always make sure you can pay your interest on time to avoid penalties.
Need to self-assess the ability to pay the home loan
This is important to help borrowers plan payments on time. Loan solvency can be determined through the following details:
Financial capacity available
This is the home equity that the borrower to buy a home is available. Currently owned in the form of real estate, cash, bank deposits. Owners can use that money to buy a house right away without having to worry about anything.
If the available capital includes the property an unsold home. When determining the available financial capacity, it is necessary to deduct the expenses when selling the house such as: Personal income tax when selling the house; Brokerage money;…
Financial ability can be supported
The amount of money that homebuyers can ask to borrow from relatives and friends. This is also a source of capital that should be mobilized before borrowing money to buy a house. Because for relatives and friends: The interest rate can be zero or even no interest.
Possibility to repay the home loan
Riders m bending mortgage repayment should plan on time and quickly. Because if the time to repay the bank is extended: The interest on the mother’s child will make the repayment process even longer.
And if the repayment period is too long: The total amount of both capital and interest to be paid will be much higher than the value of the house purchased. At the same time, if you do not guarantee to pay the rest of the money, you will be at risk of foreclosure.
The house to be purchased should be the one that is suitable for the conditions and needs
Because the house is bought, you have to take out a loan to buy: It is necessary to consider choosing a house with an area that is sufficient for use. The house does not need to be too big or too luxurious to avoid waste. However, it also needs to be fully equipped to meet the needs of family use.
If you buy a house that is too large for your use while taking out a loan:
- This will put a lot of pressure on the borrower’s shoulders because the rent will be high;
- While some money in that loan is not necessary;
- Borrowers will have to pay both principal and interest on a loan that doesn’t yield real value.
- The process of paying off debt will take longer than necessary
When choosing loan packages, it is necessary to carefully consider the term of the loan
Borrowing to buy a house with installments for 20 years will be different from borrowing to buy a house with 10 years and 5 years. The longer the loan term, the easier it will be for the borrower to breathe. But in return, the total amount of both principal and interest combined will be much larger than the loan.
Therefore, it is advisable to carefully consider and calculate the losses between loan packages: Choose a loan package suitable to the family’s ability to pay; Try to pay off your debt on time. This will save a lot of money, time and effort.
Need to pay attention to floating interest rate trap
Floating-rate traps are a problem many first-time homebuyers encounter. To avoid these traps, be aware of:
- It is necessary to estimate and have a solution in advance about: Interest rates may increase up to 30% in the second year after borrowing money;
- Should balance revenue and expenditure to always be ready to respond when interest rates rise unexpectedly;
- Residual income of the whole family each month = Total income – Total expenses. This amount should be one and a half times the amount to be paid to the bank;
If you pay off your loan before the due date, you will be fined
It is completely unprofitable to extend the repayment period of a past-due home loan. However, it should also be noted that: If the debt is paid off within a period earlier than the specified time limit for the loan package. Borrowers will be fined up to 3% of the prepayment amount.
Some banks with low interest rates will have very high prepayment penalties to compensate. Therefore, it is necessary to carefully study loan packages to have a suitable repayment direction; Avoid being fined innocently.
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