A property investment is often one of the best available. Like all investments an investment in residential property can go sour but many people the world over have done extremely well out of a home loan which is usually a win-win situation. The person who lends money to buy the property is a winner because he gets a good return on his capital and enjoys excellent security.
The borrower is a winner because he can get capital to make a big investment which could appreciate substantially. This leverage is available to investors in property or foreign exchange but in such cases everything may disappear of the investment goes wrong. In the case of property an investment seldom evaporates altogether. In many cases an owner does not even realize when his investment is actually running at a loss. His repayments cover his rent and he has a roof over his head so he is happy even if deeply in debt.
Another very important benefit of home owning is the emotional stability that it infers on the owner. Security is one of the most fundamental of human needs. When a home is owned the feeling of security may permeate through an owner’s very being make him a stable and responsible citizen, though possible a little complacent.
A young person who is securely employed should have little difficulty in obtaining a loan to buy a secure residence. He could apply directly to one of the banks or to an online bond originator who can assist in obtaining a loan at the best terms. Although a person may qualify for a loan and be in a position to meet the monthly obligations he may feel over-awed by the heavy obligation of being indebted for a period of ten or twenty years into the future.
A cash amount of between eight and ten percent of the purchase price of the property will be necessary as a starting point. At certain times, when property prices are buoyant, loans of one hundred percent may be available. Experienced people advise against this in most cases because mortgage repayments can become so onerous that a buyer can found himself in severe difficulties.
Usually a client is not permitted to borrow an amount that will require monthly amortization payments of more than thirty percent of his income. Experience proves that even this amount might be difficult to handle as year succeeds to year and so it is best to pay in the maximum amount possible in order minimize monthly repayments.
The term over which a home loan is to be repaid is an important consideration. If it runs over twenty years the monthly repayments will be more easily manageable. However the debt will hang over one’s head for a much longer time.