The dream of most people in the world is that of owning their own home, having the keys to a house that is going to be their ‘memory maker,’ and the security of knowing that they will have a roof over their head and that of their family is the ultimate bucket list goal.
Being a homeowner comes with a level of status, it indicates to others that you might have a handle on things, your life is in some sort of homeostasis and that the white picket fence image you have in mind is achievable.
So how do ‘those people’ manage to get on what’s known as the property ladder, what have they done to earn the privilege or how have they done things to get the ball rolling?
First let us clarify what the ‘property ladder’ is, read the simple definition here https://en.wikipedia.org/wiki/Property_ladder but essentially it means to buy a smaller property, to begin with, then once you have increased your finances, you buy a bigger property and so on as you move up what has been deemed the ‘ladder.’
It may not be easy, to begin with, but you can be sure it will be worth it. You will have something that no matter where in the world you decide to go or set up shop if you haven’t sold the initial property, you can be safe in knowing you always have a base camp to come back to, recoup and start again if you need.
Understanding What a Mortgage Is
A mortgage is a lump sum that you receive from either a lender or a bank to help you buy a property or home, both parties sign an agreement stating that you as the borrower makes a ‘promise’ to repay the loan amount, including a set rate of interest over the years. Watch this short video to see a great explanation of it all and the processes involved.
The word mortgage is, however, not to be confused with the term ‘loan.’ A loan is a financial agreement between a lender and a borrower whereas a mortgage is specifically related to a financial agreement on real estate or the property market.
So why do people opt to take out a mortgage rather than buy the property outright? Well, for the simple fact that this is unlikely to ever happen on today’s salaries for the working class and being able to spread the full cost over a few years makes the payments more affordable.
If we could, I am sure we would all love to walk into a bank or brokers firm with a ‘movie scene’ rucksack full of funds and lob it onto the table like we mean business, but this is highly impossible and probably illegal in most countries around the world.
Now, there are checks, credit ratings, and scores taken into consideration before anyone even thinks about having an effective decision-making meeting with you.
Lenders are doing background analysis and banks are conducting their inquiries, the process is long and winding but there is a light at the end of the tunnel, and this is why homeowners take on the challenge of owning a property with papers in their name.
3 Reasons to Take out a Mortgage
Profit and Equity Growth
Your home and its value are going to rise and fall as stock markets fluctuate, so having it being paid over some time and the eventuality being paid off to if you want, a profit, it makes sense. No point in keeping your money in the cupboard not growing, invest, and reap the benefits.
A reputable company will handle your application with professionalism and do everything in their power to make your dream a reality, businesses such as mortgage Vancouver who have years of experience in the game know what it takes to tick the necessary boxes. Do your research and choose the right mortgage lender suited to you.
This may be relative in perspective, but securing a loan of hundreds of thousands to repay over a term of around 30 years is easier than trying to get a credit card with that amount. Putting your house up as collateral will also reduce your interest rate as the banks’ risk of non-payment is significantly decreased.
Payments Get Better
The big advantage is that the set payments agreed upon remain the same, yet as times move on and careers improve the salary side of the coin increases, thus making the loan repayment that much easier and more manageable.
The main objective when deciding to take out a mortgage is the fact that you are stepping up and opting to put a roof over your family, you are the provider and this is the best way you know-how, good on you.