When is it best to take out a mortgage?

Despite the fact that no one wants to have debts, there are reasons and situations when we get indebted. A mortgage loan is a long-term commitment and we take it to meet our needs.

Mortgage as a housing solution

A mortgage loan is for many the only solution to get to their own housing and that is a good reason for taking out a mortgage. Even if there is cash for real estate, it is worth considering whether to use it to buy a property or to invest in valuation, for example, by investing in business, precious stones, etc.

Mortgage as an investment plan

A mortgage loan can also be an investment plan when you will not be living directly in the purchased real estate, but you will rent it out. In this case, it is important that all costs associated with the mortgage and any indirect costs be less than the amount for which you will rent the property. This way you can get a passive income or at least secure your future.

Passive income from real estate purchased with the mortgage loan

Passive income is when the profit on the rental property is higher than the costs of running the property and if the monthly installment of the mortgage is also covered.

Mortgage as security for the future

Securing the future will arise in years, and we cannot talk about passive income if the mortgage and the operating costs consume all of the rental money. In this case, we are talking about securing the future when the mortgage is repaid. After the mortgage is repaid, only the costs associated with the operation of the property remain. If the difference between income and costs is attractive, it is good to keep the property and have regular income (possibly at retirement age).

However, if the yield is little attractive or unattractive, the real estate can be sold. The rule is that a property purchased, for example, 20 years ago, will have a sale price exceeding both the purchase price and the mortgage, and it will even cover inflation, which is still an irreversible reality.

There are not many people who invest money from the mortgage in something else, but still, there are some. Sometimes they are interested in investing in start-up business, in precious stones or precious metals.