Between 15 - 20% of people in our country own there own businesses. This statistic is on
rise thanks to incredible invention of Internet. The staggering truth is that of these only 5% are genuinely financially free! You may well see lots of expensive cars driving on our roads and big houses inhabited by seemingly wealthy, but these houses and cars are not yet paid for. Never in our history has it been so easy to lend money. Banks and building societies are falling over backwards to lend us money. You can sign your life away to a 50-year mortgage these days if you choose! Banks and building societies are offering 125% mortgages to first time buyers and business is looking outwardly great.
The credit card companies also love today’s economy. You can borrow enough money on a credit card nowadays to buy a brand-new car! The loan companies are also cashing in on ignorant and naive individuals and this really concerns me. The advertisement marketplace is going wild on media adverts for consolidation loans. You know type? “We will help you to consolidate all of your existing loans into one affordable monthly payment” They call this type of loan a HOME OWNERS loan. Yes you can consolidate all of your existing debts into one affordable monthly loan, but what do you call affordable? People are consolidating their present debts into one huge debt and loaning money to repay this new debt. To actually repay this debt in full will take these people years. What’s more they’ve secured this loan on their one and only ASSET - their HOME!
These unfortunate people aren’t thinking about future and their long-term future plans, they’re thinking about immediate and present situation. In meantime what happens when interest rates begin to rise? The interest rates on a consolidation loan will take years to pay off and whilst you owe money to your lender you’re not secure at all because your consolidation loan is secured on your home.
What does this mean?
If you cannot pay your loan Loan Company will TAKE YOUR HOME as payment!
The reason it is so easy to lend money at present is because interest rates are so low. At time of writing this web page our present government has set base rate of lending so low that people are dangerously getting themselves into debt through their own ignorance towards economy. What is really happening will become all too apparent in next few years when tide turns and interest rates begins to rise sharply. If you’re not financially free or in control of your assets when tide turns you will lose everything. History always repeats itself and sooner or later a recession will hit world trading markets and all of those people who borrowed huge amounts of money to buy their big house and their BMW or Mercedes will be in big financial trouble.
Wait, it gets worse!
SHOCK – HORROR! Once tide turns interest rates will saw and if you’re not secure your financial world will come crashing down. The mistake that people have made is to foolishly believe that their loan rates will remain same, they won’t. Let me explain in simple terms to you my theory by giving to you a simple example:
If you have a current ‘interest only’ mortgage of say £100k and interest rate applied is £5% your monthly payment will increase with interest rate. What happens if interest rate climbs to 10%? Your mortgage could double. In 1989 interest rate sawed to 15%. If this happens (and it could) your present mortgage payments could treble! How will you survive financially?
Your mortgage payments could increase by 300% inside 12 months and any other loans you may have will also require payment. If your wage doesn’t allow sufficient funds to meet these demands than you will lose everything slowly and painfully. When interest rates do begin to rise (and they will) debt consolidation companies will cash in on you. Before you know it you could owe money for rest of your life and if you can’t pay what you owe than your lender will take your car your home and clothes off your back to meet their demands.
SO WHAT’S THE ANSWER? My advice to you is to pay off your existing debts as quickly as possible. If you are driving around in a car that is financed by a finance company pay this loan off as quickly as possible. Contact finance company and ask them for a final settlement figure. This way you’ll know exactly how much debt you’re in. If you can afford to settle your finance early than take advantage of this and settle immediately. This way you’ll own your car outright, you’ll have paid less in interest and you’ll have some equity if you need it. If you can’t afford to settle finance at present than check what interest rate you are currently paying and search around on Internet or in high street for a lower rate of interest. Whatever you do, don’t delay in taking control of your finances today.
