After our article titled “Why You Should Be Afraid Of Today’s Home Loans,” we were asked several questions about how much interest rates families can now expect to take out a mortgage. Unfortunately, we don’t know the answer to this, but we’ve put together a few tips to help you deal with any difficulties that may arise in the future.
We also wrote in our previous article that today’s interest rates on loans are so low that there really is only room for maneuver. So you need to be prepared for someone who is now in debt, so that over the years their installment will increase.
How to protect yourself from a rise in interest rates?
Most people find themselves in a difficult position not because of an increase in interest rates. For example, when they lose their jobs. In such cases, many are overpaid and more late. In this case, the legal conditions give the bank the opportunity to raise interest rates, making it even more difficult for debtors. It is worth protecting against this situation with some kind of insurance, which also covers our obligation to pay the installment payment in the event of an accident or loss of employment.
What do the banks say?
Many banks do not have the same reticence for market rate loans if the customer is overdue for more than 45 days. However, in the event of non-payment, interest on the transaction may be charged. For example, we have learned from FHB that, in the case of interest-subsidized loans, the law stipulates that if the customer has overdue principal with a delay of more than 30 days, no interest subsidy can be granted.
So in the case of interest-subsidized loans, you have to pay particular attention to the exact payment !!!!
WinCredit Bank offers its customers a life insurance coverage that covers unemployment as well, in order to prevent payment difficulties in the event of unemployment. In the case of a loan collateral insurance contracted with a bank (in case of a mortgage loan, there may be two insured persons), after the waiting period of 3 months after the establishment of the legal relationship, the insurer provides 6 months service per event.
It is also worth protecting against interest rate fluctuations, which can be done in several ways:
1. Do not borrow too much
It really should be a minimum that we can easily pay up to a 20 percent installment. This is far from protecting you from having to pay the bank’s check in the event of a job loss, but at least unexpected expenses do not disrupt your ongoing repayment. If, on the other hand, higher interest rates come, be prepared to tighten your belts.
2. Take advantage of interest rate subsidies
Interest-subsidized loans are even more expensive today than market loans because interest rate subsidies are only up to 6 percent. Still, you might be worth the extra macera, because if interest rates go up, the state will cover the costs for us.
3. Choose fixed rate loans for several years
Products with fixed interest rates for several years make mortgage loans predictable. In exchange, they are a little more expensive, but with some, our installments may remain unchanged for up to 10 years. Even if interest rates are higher than expected, the bank will not be able to change until the end of the interest period, when we may even be able to repay it.
4. Save money so we can repay it
It is almost always worth a prepayment if we can, as interest rates on loans are much higher than deposits, so we can gain more than we can lose. But you can read more about this in our earlier article.
You can start saving for early repayment as soon as you take out a loan. A home savings can be a good tool for this, as the money raised here can be used to pay off a home loan, plus a 30 percent subsidy on every payment.
Or look at the BornEarn Bank Equatorial Loan, which is only comparable in our calculator, which means that saving at a bank or holding a current account will reduce the amount owed and you will therefore have to pay less interest. This reduces the loan term.