Three Reasons Why You Should Never Go With Equity

Why is it that when you borrow money from your bank you feel some sort of guilt when you look at your wallet or your ATM card? Why is this feeling not the same when you just signed a contract with your bank stating the equity you are giving them for your home in exchange of financing? These two should invoke similar emotion because they both cost you in the same manner. However, equity pushes the border a bit more, surprisingly.

1.    Debt is Less Expensive

When you take on debt, you are fighting against interest rates and payment deadlines. When you couldn’t pay, the banks would shun you or give you high interest deals unless you clear your name in the register and improve your credit rating. If you take on equity instead, you’re giving up part of your property forever. With debt, the banks have nothing on you.

2.    Paying Interest Lowers Tax Burden

Most Britons take a loan or mortgage instead of securing their loans with their vehicles because it helps lower their tax burden. This is why most homebuyers re-mortgage their home every five years. When you pay more to interest rates, these amounts are tax-deductible.

3.    Improve Discipline

It’s a different matter when you’re spending money with a credit card. Shop now, pay later, most would say. But when you spend actual money coming from your bank, which you have to pay regularly, you develop the discipline necessary to handle even a credit card properly