All over the world, payment for house rent has become so problematic that many people resort to mortgage financing.
By so doing, owning a home becomes an easier goal to achieve with the availability of flexible payment methods that allow one to pay for the purchase of homes over a period of
time.
By way of definition, a mortgage is a loan in which property or real estate is used as collateral. The borrower enters into an agreement with the lender (usually a bank) wherein the borrower receives cash upfront, then makes payments over a period time until he pays back the lender in full.
if your salary is inadequate, it will be difficult to save once the monthly payment for the mortgage is extracted from it
It is almost impossible to come across a newspaper or magazine without an advert displaying homes for sale, which individuals can pay for on a monthly
basis.
Whatever your options, whether you want to buy a home or build yours; so long as you need a mortgage to finance it, experts insist that there are three basic things to consider before taking a mortgage.
Good, regular salary
According to a financial expert, Mr. Adeyemi Bakare, having a good, well-paying job that can take care of you and your family is the best way to start so that you can have some reserve for savings.
According to him, the job must pay above what you spend on a daily basis to enable you have some reserve.
“This is because if your salary is inadequate, it will be difficult to save once the monthly payment for the mortgage is extracted from it.
Therefore, you must save before you spend and not the reverse,” he
said.
Budget your expenditure
This is very important and can be efficiently achieved by analysing your income. Bakare said : “How much do you need to include in your expenditure to accommodate your mortgage? If your income is inadequate for your upkeep, then you cannot take a mortgage.
But if your salary is adequate to take care of your expenses, then you can squeeze in your mortgage plan,”
Consider the interest rate
It is important to know the interest you have to pay on the loan you wish to obtain as it will help you draw up your expenditures.
He advised those concerned to talk to the banker who is ready to give out the mortgage and enquire about the amount of interest the loan will attract, likewise the duration that it will have to be paid.
“If you will be paying N15, 000 every month for the period of the mortgage, for instance; you will have to factor that N15, 000 as part of the expenses. If the individual’s income is enough to cover this, then it will be easy for him to take a mortgage,” he said.
He however advised that If the interest rate on the mortgage is too high, there is the option of personal saving over a period of time for the property
needed.
“An individual can open a separate savings account for himself and for the family, invest it over a period of time. He can then start the project with good savings,” he advised.
He also advised that; “If you have the means, the easiest way to save money on your mortgage is by making an extra mortgage payment each year. These extra payments are automatically applied on your principal, not interest.
Not only does your remaining balance drop, but you will not have to pay interest each month on that principal for the rest of the loan
term.”
