Don’t Make These 3 Mistakes If You Need To Borrow Money
This post may contain affiliate links. All reviews are our own, honest opinion. See disclaimer here.
Even if you’re brilliant with your money, there are always going to be times when you need to borrow money.
It might be that you’re hit with a sudden expense or you lose your job and you need to borrow some money to get by. You also need to borrow money to buy a house, of course, so everybody is going to get in debt at some point.
A lot of people think that borrowing money is always a bad thing and you should never do it, but that isn’t true. Borrowing in certain circumstances is fine, as long as you know how to do it sensibly.
The problem is, most people don’t know how to do it right and that’s when they end up in debt. If you do have to borrow money, make sure that you avoid these mistakes.
NOT DOING ENOUGH RESEARCH
If you’re in a sticky situation and you need some money to help you out, you’re going to want to get a loan as quickly as possible.
But don’t panic and start making rash decisions without doing your research first.
If you just get the first loan you can find without shopping around first, you’re going to end up paying a far higher interest rate than you need to. You might also get caught out by increased interest payments after a certain period if you don’t read the fine print properly.
Even if you’re in a bad financial situation, you still need to take the time to do your research properly before you sign anything.
GETTING THE WRONG MORTGAGE
Your mortgage is the biggest debt that you’re going to have in your life so you’ve got to be incredibly careful and make sure that you get the right one.
There are a lot of different types of mortgages out there so you need to make sure you know what you’re looking for.
For example, if you don’t have citizenship, you’ll need a itin mortgage because you don’t have a social security number. An interest only mortgage allows you to just pay the interest month to month and then pay the capital back in a lump sum with money that you’ve saved elsewhere. This is a better option if you’re expecting a large return on an investment in later life, for example.
Most people go for a standard repayment mortgage but it’s not always the best option so make sure to consider other types.
BORROWING MORE THAN YOU NEED
When you apply for a loan, you’ll have to go through a series of checks and then you’ll be told how much you can borrow.
It might be tempting to just take it all, but you shouldn’t. If you take more than you need, you’re just putting yourself in more debt for no good reason.
Work out exactly what you need before you apply and only take that amount, nothing more.
Borrowing money isn’t always a bad thing, but if you’re making these mistakes then you’ll end up in a bad financial situation.
What are your tips for borrowing money? Comment below!
[a contributed post]