Pitfalls of “Breathing Plan”: High-Interest Rates Tie Down Homeowners, Mortgage Interest Rises Geometrically
Pitfalls of "Breathing Plan": High-Interest Rates Tie Down Homeowners, Mortgage Interest Rises Geometrically
Sweetness Turns to Bitterness, Successful Conversion Becomes Difficult, Financial Pressure Increases Sharply
In recent years, the "Breathing Plan" has become a popular option for homeowner loans. Its advertising slogan is "pay only interest, not principal, with an easy burden," which seems very appealing. However, in fact, this type of loan has huge risks and if chosen carelessly, it could lead homeowners into financial difficulties.
One of the significant features of the "Breathing Plan" is that the interest rate is very low, typically only about 2-3%. Such low-interest rates are undoubtedly attractive, but it is important to note that this low-interest rate offer has only a limited period. After this period, the interest rate will increase significantly, even jumping to P-1 to P+1 basis points, thereby increasing the repayment pressure for borrowers.
When homeowners face high-interest rates, they will consider refinancing and transferring the entire loan to a traditional bank mortgage loan to enjoy a lower interest rate. However, it is very difficult to succeed in this conversion. The mortgage scheme used on that day is usually around 80-90%, while most traditional banks only accept 50-60% mortgage loans, making it very difficult to convert. Unless the property value rises significantly, it is difficult to meet the conversion standards. Once unable to successfully refinance, borrowers will continue to be tied down by the high-interest rates of the "Breathing Plan," causing enormous financial pressure.
In summary, the "Breathing Plan" indeed has its advantages, but it is important to note that its interest rate is only temporary, and after the low-interest period, the interest rate will increase significantly. In addition, refinancing also carries certain risks and difficulties, and if chosen carelessly, homeowners may face significant financial risks. Therefore, when choosing a loan, homeowners must carefully consider not to be fooled by the low-interest offer and evaluate the risks and benefits of various loan options comprehensively to choose the most suitable loan method.
Moreover, for homeowners who have already chosen the "Breathing Plan," they should closely monitor the trend of interest rate changes, prepare for repayment in advance, and avoid being unable to afford repayment pressure during the high-interest period. At the same time, if they want to refinance, they should make plans in advance, understand the conditions and requirements for refinancing to smoothly transfer the loan.
In conclusion, choosing a loan method is a crucial decision that requires careful consideration of various factors. For the "Breathing Plan," homeowners should understand its risks and benefits, evaluate comprehensively, and make wise choices. At the same time, they should prepare for repayment in advance and reduce financial risks.