If you are looking for the best debt consolidation loans for people with bad credit, why don’t you consider getting a mortgage? Here are some of the outstanding benefits of a home loan.
Get a home of your own
So, you don’t have money to buy the house in cash. No problem. Apply for a mortgage to purchase your dream home without having to use your own cash to pay the full price. While you may still be required to make a down payment, the amount is only a small fraction of the full purchase price. By not using your available income to buy a house, you can use it in other important things, like installation of energy saving devices and paying for insurance.
People with bad credit who can afford a home loan should consider the latter as a financial savvy action. Despite the troubles in the real estate market, home ownership is still a great way to gradually build your wealth by way of equity in your home. What do you mean by home equity? It refers to the amount you already paid for the house minus the remaining balance. It’s your claim on the house. As a basic rule, if you already paid 70% of the home loan, deduct the other 30% that you still owe to get your home equity. That is the maximum loan amount you can get.
As you pay your mortgage every month, a portion of such payment also reduces the principal. As your principal decreases, your equity increases. As years go by, your equity grows because your principal drops as well. It is like having a savings account. Only that, you live in it.
Get cash anytime you need it
Are you having problems with cash flow? Access it anytime by applying for a home equity loan that allows you to access cash whenever you need money. You can use the proceeds of a home equity loan to pay for hospitalisation, education, home repairs or improvements and other big or small purchases.
There are also many other things you can do with extra cash flow. You can use it to consolidate your loans. Instead of worrying about credit card bills, personal loans, utility bills and other debts, many people take out a second mortgage and use the extra cash in the same way as debt consolidation loans for people with bad credit. This way, they can simplify payment and avoid interest from piling up.
If you are inclined to save money and invest a part of it, you can use the extra cash flow by keeping a rental property – whether or not you’re moving from your current home soon. You can rent out a small space or a huge one, depending on the property type. The key is using your debt strategically and investing it to generate profit; whether you’re investing on property, or on your health-or simply paying down your debt to reduce interests and shorten the loan term.
Improve your credit rating
If you want to improve a poor credit report, keep your mortgage loan in good standing. Creditors are more likely to extend additional credit to you if you have a history of making mortgage payments on time.
If you have a mortgage debt and you have been paying it on time, lenders will consider you as a responsible borrower. It is because you tied your debt to your asset. If your credit history shows that you have mortgage and a variety of debts that you started paying responsibly after taking out a home loan, your credit rating will increase overtime.
If you think of the long-term benefits, it is cheaper to buy than to rent
The mortgage fees can decrease overtime. If you make timely payments, you don’t have to pay late penalties and charges. While renting a home saves you a fraction of the cost of a mortgage, no matter how long you pay the rent, the owner won’t hand you the apartment. You will still be a renter after 20 years if you don’t think about buying a home of your own.
Why would you waste money on the rent when you can pay off your own home? If you are in debt but you think you can afford to make mortgage repayments, apply for one and avoid paying off your landlord’s property.
Do you have your eyes set on a certain property? Or are you planning to apply for a second mortgage to use your home equity? If so, make sure that your plan is aligned with your financial goals for the year. Try to figure out if you want a house or a new home loan. Consider your income, cash flow and other financial resources plus your credit score when applying for a loan. If you also want to avail of debt consolidation loans for people with bad credit, you can go to NSW Mortgage Corp to make your dream home a reality.