4 Reasons Why Mortgage Debt is Good for You and Your Credit
“Debt” – nowadays, this four-letter word has been turned into a scary idea that people must avoid at all costs. And this thought of incurring debt has turned off a lot of potential homebuyers into owning an Ijara home.
Thankfully, not all debt is bad. Believe it or not, some may even help you build a better credit score and open doors for more opportunities. Let’s look at several ways in which mortgage debt is an advantage.
1. Mortgage Debt is Safe and Affordable
Islamic-compliant home loan rates are some of the lowest and safest across all types of debt in the market, such as credit cards and car loans. In an ijara contract, the transaction is linked to a tangible asset, i.e. the real estate, hence it has fewer risk factors. So if you’re looking into establishing a better credit score, this route can be a viable option.
2. Mortgage Debt = Good Debt
Compared to other forms of debt, having mortgage loans is seen by most creditors as a good sign. Owning a home is a sign of financial stability and maintaining mortgage payments gives an impression of becoming responsible with their credit. This would reflect in a higher credit report and better options when applying for loan programs.
3. It Offers Protection from Volatile Rates
Interest rates can change depending on market conditions, which can be difficult for many borrowers to maintain their monthly loan payments. It’s a good thing that mortgages have fixed-rate plans where the rates stay the same regardless of market changes. What’s more, some programs offer refinancing opportunities when rates drop to give you the best prices.
4. Mortgage Debt can Turn to an Emergency Cash
Did you know that you can tap into your home for extra cash if you need additional spending money or for that much-deserved trip? Constantly paying your mortgage earns you equity towards your home, which can be cashed in via a home equity loan or home equity line of credit.
Islamic financing also will allow you to benefit from the equity you have gained in your home. Our investors offer cash-out options, which will let you pull cash from your equity and still be Sharia-compliant.
Turning Debt into Opportunity with Mortgage Debts
While it can sound intimidating, not all forms of debt are bad for you. In particular, mortgages can do wonders for your credit score and take hold of your dreams, as long as it’s properly maintained.
