Mortgage/Financing Basics: Hire A Reputable Service Provider


One basic thing in mortgage/financing is that you need to hire a reputable service provider because this financial instrument is complicated and the effects of a wrong decision can have serious financial repercussions for you. The basic concept of a mortgage is very simple. You borrow money and mortgage your home or property as a guarantee that you will repay your mortgage. What is complicated are the terms and conditions, the choice of the interest rates and the fine print in the mortgage contract. This is where your service provider will be of great help to you.

Mortgage/ Financing involves complicated calculations

When banks and financial houses advertise their mortgage packages, it looks so simple. They usually advertise 5-year, 10-year, 15-year and 25-year mortgage products. While they look simple, mortgage/ financing involve complicated calculations. Aside from that there are aspects that you may not be aware of. For instance, if you are not keen on it, banks usually value your property at the low end of the spectrum. It means that in the event you cannot pay, they get an exorbitant profit when they sell your home. Complicated calculations come with terms like fixed interest, floating interest and other terms. Aside from this, the interest rates also matter. A half-percentage interest on a mortgage can become a hundred thousand in interest alone in a period of 25 years. This is the reason why you need a service provider.

Mortgage-06Mortgage/ Financing involves documentary requirements

When you engage in a mortgage/ financing transaction, there are documentary requirements involved. This includes the filling up of the mortgage/ financing application form and a host of attachments. Some requirements can become time consuming if you do it personally. You will need a service provider to do it for you. They can do it faster, more accurate and you save on your time. Of course there is a fee involved but remember that if you do a cost and benefit analysis, you have much to gain by getting a service provider to assist you. Documentary requirements are a must for the approval of your mortgage/ financing application with the bank or financial house.

Mortgage/ Financing involves risks

This type of financial transaction involves risks on both the bank and the applicant for mortgage/ financing. On the part of the bank, the risk is that you will default on your payment and thus they have to go through a court proceeding to get your property to the auction market. Although the bank gets something if you default, they will still be left with a property inventory that may be difficult to sell in certain periods during the year. On the part of the applicant, the risk involves signing an agreement where the advantage is all on the part of the bank. You may end up having a low valuation, a high interest rate and higher charges if you do not hire a service provider.

Mortgage/ Financing can make or break your business

If you are contemplating on using the proceeds of the mortgage/ financing for business capital, remember that the transaction can make or break your business. If your business is low volume, high margin type of business, a drop in the already low volume will mean that you will be paying more for the cost of money than your contribution margin or profit from sales. If you are into a high volume, low margin type of business, a sudden drop in volume will easily translate to you paying more interest rate than what you are earning. Either way you will need the help of a service provider.