Between 15 – 20% of people in our country own there own businesses. This statistic is on the rise thanks to the incredible invention of the 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 the 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 the 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 the 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 the future and their long-term future plans, they’re thinking about the immediate and present situation. In the meantime what happens when the 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 the Loan Company will TAKE YOUR HOME as payment!
The reason it is so easy to lend money at present is because the interest rates are so low. At the time of writing this web page our present government has set the base rate of lending so low that people are dangerously getting themselves into debt through their own ignorance towards the economy. What is really happening will become all too apparent in the next few years when the tide turns and the interest rates begins to rise sharply. If you’re not financially free or in control of your assets when the tide turns you will lose everything. History always repeats itself and sooner or later a recession will hit the 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 the tide turns the 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 the 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 the interest rate applied is £5% your monthly payment will increase with the interest rate. What happens if the interest rate climbs to 10%? Your mortgage could double. In 1989 the 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 the interest rates do begin to rise (and they will) the debt consolidation companies will cash in on you. Before you know it you could owe money for the rest of your life and if you can’t pay what you owe than your lender will take your car your home and the clothes off your back to meet their demands.
