Dubai real estate market is believed to be one of the most attractive real estate markets for investment. Reasons can be many such as easy availability of mortgage loan. When the offers are so attractive, it is impossible not to be in debt at all. However, most of the people make several mistakes when they face debt. Few go for debt consolidation option. Following article highlights few mistakes that people make in consolidating their debts and ways to avoid them.
Dubai property market appeals several investors due to a number of reasons and one of them is easy availability of mortgage loan for commoners to buy property. Impressed with this option, most of the people buy property on credit without assessing their credit score, expenses and income and eventually get under heavy debt. While in search for a solution to get rid of extreme debt, it is easy to get enticed with the promise of relief through debt consolidation solution. Bear in mind, debt consolidation is not something magical that can erase all of your debts in an instant. It is merely the first step to take you out of debt and you need to follow a strict repayment regime afterwards.
With so many debt consolidation offers out there in the market, choosing the right option is another challenge as not all options are worth signing up for. You must be very careful before picking any option otherwise you get stuck in a debt consolidation plan with high processing fees, excessive interest rates and unreasonable terms. The following article highlights common debt consolidation rip-offs and ways to avoid them once you decide to go for this option.
Not knowing your real finance
People get enticed to buy villas or apartments for sale in Dubai due to attractive mortgage loan options but later, they realize that they have a certain amount of credit obligations. Although they are not aware of their credit score and also do not know how much will it cost to consolidate, debt consolidation seems to be the only viable option at this time. Remember, debt consolidation companies can also turn down your applications due to poor credit score. If you have planned to consolidate, you must seriously consider all the possible costs before approaching a lender for a debt consolidation loan. Otherwise even upon approval, your monthly payments may considerably reduce, but you could end up paying a higher amount of interest rate charges.
Not Addressing the Underlying Problem
Getting approval of debt consolidation loan does not mean that your problem is solved. Your pressure may be relieved for short time, but remember debt consolidation is not a solution to the underlying problem; it is merely a tool. Getting a loan to perpetuate the issue will not work as it will only get you into further trouble and this is the debt consolidation mistake that you must avoid. You will have to make some real changes in your lifestyle to avoid reloading of the loan. Identify your cash flow and see where the major chunk of your income is going. Do not think of buying anything that can put you into a new trouble. For instance, you should not eye another Dubai apartment for sale simply since you are not backed by enough cash. Also stay away from impulse buying. Draw a budget and follow it strictly. In short, you will have to change your every habit that had made you debt-ridden in the first place.
Not Thinking about Hidden Costs
Debt consolidation offers are loaded with several types of hidden costs. In addition to interest rate, there may be a case processing fee, service fee or penalties for sending a late cheque. Never be a carefree borrower. Take time out to evaluate different debt consolidation companies and pick the right option, which offers more transparency in transactions and has no hidden fees. Make sure, every single penny you send goes towards servicing your debt and not to pay administrative fees.
While trying to get out of debt, the mentioned mistakes are made by people quite often. It is important to check and avoid them as best as you can.