Borrowing money isn’t always a bad thing

Many banks will quote a monthly mortgage repayment amount that seems affordable at face value but is in fact based on a 20- year term period. Banks are businesses and it works in their favour if you take longer to repay your mortgage because that translates into more interest repayments. The longer the duration of the home loan, the more interest you pay, the more profit they make. If it takes over 20 years to repay a bond, it’s often the case that the value of the interest repayments exceeds the initial loan amount. Home loan calculators are a useful tool that can help you assess how much you could afford to repay on a home loan depending on the deposit saved, if interest rates change and how long it will take you to repay the mortgage with topped- up contributions. It is essential to have a goal for when you’d like to finish paying off your mortgage and a plan in place to achieve this goal. If you don’t do this you could become a mortgage prisoner. As we’re about to conclude the year and enter the festive season, it’s a good time to remember your financial goals and not let your guard down by unconsciously swiping or tapping that credit card. “Janu- worry” is here, and so is the financial anxiety that comes with it. But it need not be the case. Debt can either be the cure or the cause of your financial position. Reconsider spending patterns that prompt you to use your credit card. Too much debt over short periods is an irregular spending pattern that is a warning sign. There’s no harm in buying what you can afford or staying in your financial lane if the alternative forces you to sacrifice your hard- earned income on servicing consumption- driven debt. For better or worse, debt is a part of our financial portfolios. But the road to financial empowerment is not always easy – financial planning can help you keep your eye on the prize.[