You May Not Need That Loan

Have you heard about the parents who wanted to give their son the best grad gift ever? They financed the new SUV, which their son fancied. And guess where the money came from? The loving parents took a loan against the equity of their home!

I didn’t believe it and still don’t. I mean I can understand a parent loving his/her child but going to such an extent just shows how short sighted the parents really are. It’s one thing to love your children and shower them with gifts. But there are limits to everything. And here, they crossed the limit when they took the loan for this vehicle.

I know this sounds a bit preachy but do you really believe that the roof over your heads is irremovable. Imagine the plight of these parents if they are unable to repay the loan. They’ve lost their home and for what? A vehicle?

There has been an increasing trend among people to cash in on their home’s equity for the simplest of reasons. I know of a woman who wanted to go to the Bahamas on vacation. However, her financial situation was not too good. So what does she do? She goes straight out, takes a loan against her home, and is on the next flight to the Bahamas.

Now with interest rates rising on these loans, it is not too difficult to imagine such people finding it difficult to make their payments. But guess what, it needn’t be this way. Just because these loans are easily available, you don’t have to take them. Borrow against your home only if you have a need that is important like refurbishing your home or completing your education – anything that will help you in real terms.