When borrowing a loan from a bank or an outside money lender, you have to assure them that you will be paying them back with interest. This brings the Asset Depletion Mortgage into the picture. Here’s all you need to know about what is an asset depletion mortgage and how you can use it to your benefit!
Borrowing money is something not many people like. But when you’re growing up as a person or family, finance is a huge need. If you want to buy a car, house or even a shop to start your own work, money is a huge factor that will determine how much you will be able to invest and earn. In these kinds of scenarios, a person usually looks towards lenders or, most of the time, towards the banks.
What is Asset Depletion Mortgage?
Any bank provides a loan only when they are able to verify and make sure that you will be able to repay them with a good profit margin. Banks offer various loans such as cars, houses or for their own business only when they are able to see that you have enough sources to repay them or you have enough assets that could be seized and sold to get the money back.
When it comes to a salaried person, his or her salary receipts, credit score, loan history and bank transaction details are enough assets for the bank to grant him a loan. But when the question is about a non-salaried or an elderly person, they need to verify certain things. These things are basically your assets. Things like your property, vehicles, investments, stock holdings if any and other such stuff helps them to understand if the person is eligible for a loan or not.
How does Asset Depletion Mortgage work?
Asset depletion mortgage takes everything like your income, investments and stock holdings (if any) under consideration. They calculate your monthly income through such sources and then subtract your average expenditure every month. After making these calculations, the bank or the lender makes sure that even after all these calculations, you’re having enough money to pay the monthly premiums of the loan.
Usually, they start with adding income, investments and stock holdings and prepare a rough calculation of your income. Then the bank or lender subtracts your average monthly expenditure. After this, whatever number comes up, is divided by 360, which is the average number of premiums a bank or lender will usually take. If these calculations come out to be profitable, only then you have a chance to get the mortgage loan in the asset depletion mortgage.
Remember that these calculations may vary due to the policies of banks. Every bank has its own policy, so be sure to get a thorough look at the paperwork before getting a loan. Things like loans can get crazy at times.
Can you use the asset depletion mortgage to your benefit?
Well, the usual answer is Yes! But again, you will have to be thorough with the paperwork and your plan. If you are willing to start a business from the money or buy a house, make sure you are saving something after paying the premiums. A little saving never hurts.
Make sure that your assets, that is, your salary slip(in case you are a salaried person), house, investments and holding are intact all the time. You always should give yourself the option to get out of a scenario where you will have to borrow money.
What things to keep in mind while borrowing Asset Depletion Mortgage?
Loans can be tricky at times, and a little conservation never hurts. Here are a few things for you to keep in mind while borrowing Asset Depletion Mortgage-
1) Always keep your paperwork intact and handy. Try to keep the soft copies on your smartphone or your computer. You can also upload it on your google drive to gain access anytime. This will help you to show your papers and assets whenever required.
2) Take a thorough look at the loan or mortgage papers. Calculate everything yourself or ask the lender or bank representative to show you the calculations. Make sure that you are not over-paying once getting the loan.
3) Your assets are crucial. Keep your job secured. Losing a job would be the last thing you will want when you are in debt.
4) Keep an eye on your holdings and investments. Try to maximize your profits and keep saving for the next premiums of the loan.
5) Have a solid plan to repay your loan. Prepare accordingly, and invest carefully. Do not over assume, but keep it simple and work and use your money according to your calculations.
From where to get the Asset Depletion Mortgage?
You can reach out to the banks. Those are the safest options, to be honest with you. With an external money lender, things might get ugly at times. If you have assets, then approach a bank. The representatives will let you know what all they will want. They have a splendid calculation system. Every premium transaction is always recorded and you will even get emails or messages from the bank regarding the dates and how many premiums are left to be paid. They have a support or customer service team always on board to help you solve your queries.