For a lot of people, buying a house is a lifetime accomplishment that requires years of hard work and saving. Depending on the house you would like and the loan you can get, we believe saving at least £30k is a must. If you already have a house but would like to get a second one as an investment property or a vacation home, you may have to start the process all over again.
However, some people are smart enough to take part in our raffles and acquire Spanish beach homes for a starting price of £2. That saves them years of savings and the grind that comes with it. For those who want to purchase a house the traditional way and do not have sufficient cash, you will have to look for ways to get money. In this article, we will help you find ways to finance the home of your dreams.
Table of Contents:
- Which Mortgage Should You Take Out?
- What is Rent-to-own? Can it Be a Useful Alternative?
- Can Crowdfunding Platforms Come in Handy to Finance a House?
- How can Cloverhut Help You Finance Your Next House?
Which Mortgage Should You Take Out?
If you are like the majority of people, chances are you probably need a mortgage to finance your new house. Before you get that mortgage, make sure you qualify for it and that you have enough money to make the required down payment. Consider that most banks usually want you to pay down at least 20% down and they will finance the rest.
Should you take a fixed-rate or variable-rate mortgage?
According to Investopedia, studies have shown that borrowers who opt for a variable rate mortgage are likely to pay less interest in comparison to fixed-rate mortgages.
However, it is important to note that the type of mortgage you should take out depends on the purpose of your mortgage and the period. Generally, the longer the mortgage, the riskier it is to take out an adjustable-rate mortgage (variable) because the rates are more likely to fluctuate. Interest rates are usually influenced by these factors:
- Supply and demand
Interest rates are meant to reward the lenders for taking a risk and penalize the borrower for spending money that they will receive in the future. Having said that, the higher the risk for the lender, the higher the interest rate for the borrower. Moreover, supply and demand are also contributing factors that can severely impact interest rates. The more people take out mortgages, the higher the interest rates will be.
The same goes with inflation as the higher the inflation, the higher the interest rates will be. The rise of interest rates in 2008 is also part of the reason why the world suffered a major financial crisis. The rates were really low which caused a lot of people to start taking out mortgages to buy their dream homes. Unfortunately, people could not take part in our house raffles at the time and get a beach home for a starting price of £2 so they were left with traditional mortgages. As demand suddenly rose, the interest rates started doing so as well causing mortgage payments to increase. A lot of people ended up defaulting because their monthly mortgage payments had become unaffordable.
With that being said, it is better to stick to fixed interest rates if you are planning on repaying the loan for the next 20 to 30 years to come. If you are an investor and plan on refinancing in the coming months or years, then the ARM is a better choice. If you are not sure, remember to speak with a banker and to use mortgage calculators.
What is Rent-to-own? Can it Be a Useful Alternative?
Rent-to-own deals are also a great alternative to owning a home. Similarly, to a car, you can choose a:
- lease-purchase deal; or
- lease-option deal
A lease purchase deal allows you to make monthly payments towards owning the property without having to take out a mortgage. At the end of the contract term, you will either have to purchase the house by paying the remainder.
The lease-option deal is very similar. However, the minor difference is that you have the option to buy the house or not at the end of the deal. If you feel like the house is great and you would like to continue living in it, you will have to pay the remainder of the house value. Most people end up taking out regular mortgages to purchase the house completely. If you feel like getting a new house, you have the option to leave and will not owe anything to the landlord.
Can Crowdfunding Platforms Come in Handy to Finance a House?
Crowdfunding platforms can also come in handy. Let’s say you would like to buy a house and for some reason you do not have any money, you can ask for people’s help to buy a home. The great thing about this alternative is that you will not have to pay people back and will own a house for free. People can show a lot of unity and solidarity through platforms such as:
Keep in mind that people are more likely to give you money if you suffer from something that prevents you from working such as a severe accident, extreme poverty or something else. If you are not asking for money because of something beyond your control, it will be hard to get some money from people.
How Can Cloverhut Help You Finance Your Next Home?
We believe that Cloverhut can help you with purchasing a home. We give you the chance to take part in our raffles which can land you a home by the beach in Spain for a starting price of £2. In addition to this, we have created a club that rewards our most loyal customers. That club is called CloverClub and by joining it, you can receive:
- Exclusive discounts
- The chance to win a trip to Mallorca for 2
- The chance to win £1,000 tax-free
- Free numbers in your birthday month and much more.
So, if you want to get a new home in Spain without taking out a mortgage nor paying a hefty sum, make sure you take part in our raffles. If you want the above-mentioned benefits, you can join the CloverClub from here.
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