Choice of loan: mortgage or payday loan? what to choose?
You may be faced with the following choice: are you going to borrow money with a mortgage or payday loan? This may be the case, for example, borrowing money for the renovation of your home or borrowing money for your residual debt. What are the differences between these loan products and when is one more attractive than the other? See http://kensakunet.com/business-short-term-loans/ for further editorial
Mortgage or loan: what are the differences?
Since the mortgage requirements were adjusted in 2013 and 2014, there has in fact been little difference between a mortgage and a payday loan. Both loans are subject to mandatory repayment and, in some cases, both loans are tax deductible. The main difference between a mortgage and a payday loan is that a mortgage is a loan for which a house is used as collateral. More info on: how does the mortgage guarantee work?
Borrow money for renovation
As mentioned earlier, the choice of a mortgage or payday loan can be discussed when you want to borrow for the renovation of your home. A mortgage is only interesting if you want to borrow more than $ 50,000 for your renovation or if you want a term longer than ten years for your loan. In all other cases, a payday loan is probably the best option.
Benefits of a payday loan
The advantage of a payday loan over a mortgage is that you can opt for a shorter term. For example, you can adjust the duration of your loan to the duration of your target loan and you are more debt free than with a long term loan. It is also much easier to take out a payday loan. This is explained by the fact that there is no notary or valuation, unlike the subscription of a mortgage. This also saves you costs, so that a payday loan is cheaper as a whole despite the higher interest rate.
Borrowing money on residual debt
Another loan goal, where you may be faced with the choice between a payday loan or a mortgage, is to borrow money to pay off the residual debt. Sometimes your residual debt can be co-funded in your new mortgage. However, this is not always possible, whether because of your income or the value of your new home. A payday loan is a good alternative. You will then benefit from the advantages of the payday loan and the tax deductibility of the interest on your loan for your residual debt.