When Should You Extend Your Mortgage?

Many people that have a mortgage will consider whether they should extend it at some point. Often a home will gain value in the long term and so will be worth a lot more than the original mortgage taken out on it. This means that a mortgage lender may be prepared to lend some extra money against the home, knowing that they will still get more back if they have to sell it if the repayments are not met.

If you need some extra money, then borrowing extra against the house can seem like a great idea. The interest rate on a mortgage tends to be lower than that on many other forms of borrowing and so you may feel that it will offer you the best deal. However, you need to compare it with the cost of other forms of borrowing in real terms, not just compare the interest rates. You will find that if you have a long term left on your mortgage then the actual amount you repay will be a lot because the interest will add up over the years. It is worth calculating how much the cost of the loan will be and then compare it to other forms of lending.

Even if the cost is not that much different or not much of an issue for you, you should still consider whether borrowing against the home is such a good idea. It is worth remembering that if you cannot keep up payments on a mortgage then the lender can repossess the home and sell it and then you will have nowhere to live. This may seem unlikely, but it does happen to people and so you should consider whether this might be a possibility in the future. If interest rates go up then the repayments on any money that you have borrowed will go up and you will have to consider whether this will be something that you will be able to afford. You may be able to afford the repayments at the moment but this could change when the rates change. Consider how easy they will be to afford at the moment and then think about what a difference could be made by an increase in the rates.

You may find that it will be better to get a personal loan or some other form of short term loan which will be paid back more quickly and therefore less likely to be effected by a rise in interest rates. Although rates may still rise during the term of the loan, it is unlikely to rise so much over the term as a whole as rates do not normally rise very quickly in the short term. It may be better to pay a little more for a shorter term loan for this reason alone, depending on whether you feel that rates are likely to rise or fall.

Once you have compared costs and found out how much a loan will actually cost you compared to the cost of borrowing extra against the mortgage you will then be a position to decide what to do. Consider the risk of losing the home if you do put it against the mortgage and what may happen if the interest rates significantly increase as well. It is a good idea to take time to think this over and also to discuss it with others as it is a big decision to make.
It is also worth considering whether the extra money that you are borrowing is really worth the cost of the loan. You need to decide whether the loan is worth it in the first place. You will have seen how much it will be and you need to consider whether you would still have bought those items if they cost how much they are priced plus the cost of the loan.

If you do decide that you want to borrow money and you feel that extending the mortgage is the right idea for you, then you need to think about whether your timing is right. It is wise to think about the value of your home and how that is likely to change in the future. You lender will consider this when they decide whether to lend you the extra money but it is worth taking a look at it as well. Consider how it makes you feel and what might happen if you decide that you want to move house, need a bigger home or whatever. If this is the case then having a higher mortgage could have an adverse effect as it may mean that when you have to move it could be harder and if you want a more expensive home, you may not be able to borrow more money for this as you may not be able to show that you can pay back a significantly bigger amount.


What are the Risks of a Student Loan?

Many people think that a student loan is really worth taking out. They feel that having a university education will be well worth it for many reasons. They feel that the degree will get them a better job and the whole experience of being at university will be a lot of fun and give them an experience that they will not get anywhere else as well as a way to move out of home but still with some support. However, all of this costs money and the loan tends to be the way that most people pay for it.

Many people feel that a student loan is good because it is paid back slowly over time and the interest rate can be protected so that it is not too high. In the UK the loan only have to be paid back once you earn over a certain salary and then it is a percentage of that salary taken out through a tax code. This means that it is not counted as debt so does not show on your credit rating and will not count against you when looking for other loans. After a certain time the loan also gets written off, which means that if you never earn enough to make repayments, then you may never have to repay any of it.

However, the rules of the student loans are set by the government and it was thought to start with that they would be kept to and everything would be well managed. However, the government has already gone back on one of their original promises with regards to the loan and so there is no way of knowing whether other things may be changed in the future as well. If the government changes there may be further changes as well and so it could be that the terms get worse after it has been taken out. This may not seem fair or likely but it is something to consider if you are thinking of taking one out.

Another risk is that if you had gone to work instead of taking three years to study, you could have done better in your job. You would have had three years of work experience and you could have had promotions and been higher in a company getting higher pay than starting after university. Of course, this depends on what career you want to get into as some are impossible without a degree but others can be worked up to. If you want a career where you need to have a degree then it is far more worth taking the risk of a student loan. If you are not sure what you want to do and do a degree in something you find fun, not sure what you want to do in the future, then you could find that the loan is not the right thing for you. You could end up having to pay it back but doing a job which you could have done without having the degree.

It is a big decision. Many students just assume if they are capable of doing a degree because they have the qualification then they should do one. However, it can be worth waiting. Although the cost of the degree may go up, it can be worth doing some work experience first, for a good few years, to make sure that the degree choice that you have made is something that you really want to do. It can actually be very hard to imagine what it might be like working in a certain industry until you actually do so.

Obviously doing a degree can be great and many people will tell you that. However, a lot of people did not have to pay for their degree and so they will not understand the consequences of that. A free degree where you would only forgo any salary you would have otherwise had for those three years is very different to doing a paid loan. You will need to consider whether you think that it will give you good value for money and whether you would be happy with having that loan hanging over you for 30 years. This is longer than most mortgages so is a long time with a debt to pay off. Some people do not mind having a loan, but others do and you need to consider whether you will mind or not mind this.

So the risks of a student loan are the concern associated with having a loan hanging over you once you are done and the fact that you may not get a better job as a result of doing the course and spending all of that money. One alternative is to pay outright, if you can afford it. However, this could work out more expensive, because with the loan you only repay if you are earning enough and it is written off after three decades. You may end up not having to pay it all back anyway.


Is it Possible to be Happy Without Borrowing Money?

There are many people that think that if they had some more money then they will be happier, others do not agree, but there are a lot that will borrow money to increase their happiness.

It is worth being careful if you are thinking about doing this. Although the items you have bought may bring you some happiness, particularly when you first buy them, you may find it less good when you have to pay the loan back over a long time. You may find the repayments easy at first and may not mind paying it when you still remember what you spent the money on. However, as time passes, you may find it harder to manage and it may be less fun as you may no longer feel happy about what you bought. If interest rates go up, the repayments will be higher and the cost of the loan will go up as well. It may be harder to pay for it and if prices rise as well, this could make it even more difficult to manage. It may be the case that you find the happiness of having the items that you spent the money on is very much outweighed by the stress of having to pay it back.

If you find that you would like to have more things, then you can use your savings to pay for them rather than borrowing. This is a much cheaper option and is less likely to cause you as much stress in the future than borrowing money. Another way is to wait and save up. Not only will this also avoid the borrowing, but you will have time to think about whether you really want the items while you are saving up for it. It will take time and hard work budgeting to save the money and you will have to decide whether you think that the item you want to spend it on was worth all that hard work and effort.

Sometime sit can be good to not measure your happiness on the amount of items you have or how much money you have. You may feel that having more will be the answer and that by borrowing some money and having more things you will be much better off. However, if you get yourself into a lot of debt you can find that things get really hard. It can be very difficult to pay back debt, especially if you have so much that you only just manage to make the repayments, each month. You may end up paying back the minimum and if you do that on a credit card then you could find that you will be in debt for a very long time.

So you may find that you will be even happier if you do not borrow money. It is a matter of getting into the habit of not spending so much money. Do not think that you have to have lots of things to be happy but enjoy what you have and things which do not cost money. It can be hard at first but it does get easier and you can find that you will take joy in not spending money and building up your savings. It can be very pleasurable buying items that you have saved up for knowing that you worked hard to get it.

However, there will be some things that you will never be able to buy unless you borrow money. For example, it is very unlikely that you will be able to afford to go to university or buy a home without borrowing money. These things may not make you happy, but a lot of people get a lot of pleasure form both of them. The thing with these sorts of debt is that they should enable you to gain money in the long run. The education should enable you to get a better paid job, which will mean that you will be able to buy more things, especially once you have repaid the loan. You should also find that if you buy a home, it will increase in value and so you will get more money back from it than you paid in a mortgage unless you are very unlucky.

So it is not always that straight forward to know whether a loan will make you happy or not. It is always wise to think through a loan before taking one out. Consider every form of borrowing before you do it and make sure that you think about how much it will cost you, how long it will take to repay and whether you think that it will be worth it. It may seem like a lot of effort, but often you will be making a really big commitment and so you need to make sure that you are ready to take that on.