Let’s start with a fact. Guess how much total interest you will end up paying over a 30-year loan, assuming the loan amount is $500,000 on either a 2.42% rate (average on Dec 2021) or 5% rate (average over the past 10 years), with a $10 monthly fee.
You’ll pay $207,353 with a 2.42% interest rate, and $469,879 with a 5% interest rate. You are insane if you do not read this chapter!
The banking industry is very busy; it is almost purely transactional driven. Each lending manager in the bank has a KPI (Key Performance Indicator) or target that is related to their bonus. And each broker is paid by each home loan that is settled. All the banks’ executives have a three-to-five-year term in their role.
The current banking system is designed for immediate gain and short-term results, for its bonus, commission, and share price.
However, you sign up for a 30-year mortgage. On average, the household will keep that mortgage for between seven and ten years. The industry, unfortunately, is not so focused on the long-term, and is weak in financial literacy and financial education for their clients.
Therefore, all property investors need to take the initiative and responsibility to seek ways to look after their own interests. I hate to say this, but it is true that all the investors, consumers, and mum and dad investors, cannot have a victim’s mentality.
