Mortgage Repayments – what you need to know
It is one thing to borrow a home loan amount you think is manageable based on your current salary and another thing to actually make sure that payments get made on time.
As with anything else in life, timing is everything. People often find themselves confronted by undesirable hardship by not doing things at the right time. There is a perception among some borrowers that the lender wants you to take longer to make mortgage repayments so they can charge you more interest.
While this may sound plausible, it is not the ideal attitude to have towards mortgage repayments. Your credit history is basically your license to building equity, taking out further home loans in the future for potential purchase of investment properties, getting a range of different insurance options and so forth.
Constantly delayed mortgage repayments can reflect badly on your credit file. Once you have taken out a home loan, you more or less know what you can and can’t afford in terms of mortgage repayments. One must wonder, why is it then that mortgage repayments often get delayed? The most common reason is a mismatch between when you receive your salary and when your mortgage repayments are due.
Borrowers normally have it set up such that home loan mortgage repayments are automatically deducted from their bank account. Unless your salary payment coincides with the day of your repayment, the transaction will decline due to insufficient funds and depending on the arrangement you have in place, you might well incur a dishonour fee.
While this form of an occurrence may be rectified by making mortgage repayments at a later time, if it continues to happen on a frequent basis it will ultimately impact on your credibility as a borrower. When you go to take out a home loan in the future, your prospective lender will look at your credit file. The importance of on-time payments can never be underplayed.
Another common mistake home borrowers make is they seem to forget that their on-going credit history isn’t just dependent on their ability to repay the home loan. It depends on every loan you have taken out through a lender. This would include personal loans, student loans, credit card debts, car loans and the like.
Even non-payment of bills such as water, electricity, gas, internet and mobile telephone can sometimes put you in bad books and may end up as a negative reflection on your financial reputation. It is always wise to be a payment in front on loans than a payment behind.
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