The international financial crisis has hit many people. Many do not consume the same way as they used to and rather save money instead for spending it for bigger purchases. However, Norwegian households do not seem to be too much intimidated by the gloomy prospects for the European market or by the hints of interest rate hikes from banks. Norwegians borrow money for all sorts of acquisitions like never before. Consumer loans, mortgages and credit card loans are the most common types of loans in Norway.
In particular, consumer loans and the credit market increases are clearly in line with the overall loan growth. During this development it is important not to get "carried away" and thus borrow beyond your means.
What does it mean to borrow beyond your means?
It is important to keep a cool head and control of your situation when taking out loans. Even if a lender offers to lend an additional million, it is important that you are comfortable with the loan amount you choose to take up. One must think of how much the loan is actually going to cost every month, and if this is an amount you are actually willing to live with. If you are comfortable with the
loan amount and how it is going to affect your monthly expenses, it means that the loan is within your ability to pay it off. If, however, you know that the loan amount is too high, especially considering the monthly installments, then you are probably borrowing beyond your means.
Although the monthly loan payments, to a certain extent, are governed by the extension of repayment or collection, the rule of thumb is still not to borrow beyond your means. In this way you can avoid unpleasant situations like receiving reminders or debt collection. And you get more control over your personal finances.
The banks themselves know that it is more profitable to have customers who have the ability to repay their mortgages than those who do not. Therefore, they set a number of considerations before a particular person can apply for a loan. One of these requirements may be home ownership. Another may be that borrowers with default payments can not take up further loans. These requirements are a way to ensure that both parties, the customer and the bank, enter into loan agreements that are realistic and feasible.
