If you’re struggling with bad debt, you may hear some people giving unsolicited advice like, “If you don’t want to go bankrupt, don’t pay your debt with another debt-much less with mortgages”. Yes, being high-risk borrowers could mean higher interest rates, but it doesn’t mean that you’ll be in deeper trouble if you get a reasonable loan. It’s just a matter of learning the proper borrowing-and-repayment strategy.
Here are some of the most practical reasons why a secured loan like mortgages can be a very practical option for you.
As a high-risk borrower, you have the greatest need for financing
Good financing companies like NSW Mortgage Corp know that. Businesses exist because of identified needs. And what is greater than a need of a borrower who struggles to find a good financing option because of bad credit history?
Good lenders know how to evaluate risk and provide good loans to people who may have messed up in making financial decisions-but are still worthy of a second chance. After all, everything that happens can be translated into a powerful learning experience. Just make sure that your new lender also cares about your finances by providing you easy to pay the mortgage at a rate that you can really afford.
You have the fewest loan options
True—there are many alternative lenders online that promise low-interest rates and high approval rating—but, they can charge hefty penalties and accumulating interests when you fail to pay on time. But, that’s not the case when you apply for a second mortgage. By its very nature, a mortgage is a secured loan which means that they can go after your property when you default on your loan. It lessens your risk of not being able to pay back-so lenders will be more considerate in approving your low-interest mortgage.
If a lender helps you at the time of your greatest need, you’ll know that you found the right company
Are we loyal to a particular bank? Is it worth out loyalty? When your credit score goes down, and your bank refuses to lend you a loan—you will know that you need to look for a better one. As we grow older and take on more difficult challenges, we also need to find the right partners in financing. That’s why we should take advantage of our difficult financial situations to test the reliability of our finance partners-whether it is banking, lending and business partnerships.
You don’t have to bury yourself deeper into an unsecured loan which gives you very short opportunity to pay it back
Take credit cards for example. When you make a cash advance at 22% interest, imagine how much you’ll have to pay in interests when you fail to repay it within three months. Defaulting on a personal loan with 12% is bad enough—but it gets worst when you default on credit cards. Not to mention the fact that you’ll also have to brace yourself for lower credit scores because maxing out your card means exceeding the 30% utilisation ratio.
You actually get more money out of a mortgage
You can get a maximum of 80% equity on your home. So, if you paid $600,000 already you can expect to receive a maximum of $480,000 loan. That amount of money could already cover not only your urgent projects like home improvement or a vacation abroad—but, you can also use it to invest in a small-scale income-generating project, pay off your current bills and to save money on your emergency fund.
Getting a second mortgage is a very practical way to consolidate your loans
Do you have credit cards, personal loans, outstanding utility bills and unpaid personal debts to family members or friends? Then, it’s high time to consider consolidating your debts. By rolling all your debts into one loan—you’ll not only find it easier to pay, but you’ll take away the stress of worrying how on earth could you possibly pay for more than five loans with varying interests and due dates.
Some people are wondering why there’s never enough despite their high salary. The truth is that it is really difficult to budget your money when you have so many bills to pay. Missing a due date on a particular bill could also mean additional interest or penalty-which translates into higher payment and lower net income. When you only have very few money left for your basic necessities, and barely enough to save for an emergency fund, the risk of burying yourself in more debt is very high. You’ll end up borrowing money to pay for an old debt, and borrowing a new one when you fail to pay the second debt. The cycle of borrowing to repay loans will go on and on until you realize that your earnings just go directly for the interests and fees of your debts.
Learn more about NSW Mortgage Corp mortgages specifically suited to your financing needs by making an enquiry today!
