For the average person a home is the biggest investment of a lifetime. It costs so much that he almost always has to seek a loan and he will continue to pay interest on the loan for most of his life.
Interest on the amount borrowed will be paid monthly. Over many years the interest alone will probably cost more than the price of the house. However, the cost of the loan is the price paid for an opportunity to make an investment. As the value of that investment increases with the value of the home it can more than compensate for the costs of borrowing.
Many experienced property people like to repeat the word ‘locality’ three times to emphasize the importance of buying in the right area. Especially lucrative is an opportunity to buy a poor house in a good area.
Experienced property dealers know that buying in the right place at the right time and at the right price can make them rich. That is where the value of a home loan comes in.
For the borrower who will be exposed to great opportunities and risks it is important to find a satisfactory lender. Major banks lend money to aspirant home buyers because it is a lucrative area of profit. Borrowers must know that the banks are not in business for charity.
Major banks lend money to aspirant home buyers because it is a lucrative area of profit. Borrowers must know that the banks are not in business for charity.
They will only lend if a borrower has sufficient security. If they make a mistake and lend to someone who cannot meet repayments they will take back a home without compunction. Borrowers must beware. Banks are not charity workers.
Smaller, more flexible lenders may be able to offer better terms than big lenders who are constrained by red tape and strict regulations. A borrower who runs into difficulty with one lender may quite easily switch to another. Alternatively a new borrower may approach a niche lender without going through the conventional channels and be offered better terms.
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