In the past few years, I’ve read a lot about the importance of becoming debt free if you want to gain financial freedom. Actually, there’s a contradictory aspect to this popular belief.
Home loans or credit can pave the way to your financial freedom, instead of blocking it.
Don’t believe me?
This article will tell you about the working of commercial banks, what they do and how they can help you gain financial freedom.
Basically, these banks are financial intermediaries who can provide home loan refinancing if you are seeking financial freedom. Their function is to link the borrowers with the lenders…match demand and supply.
In turn, they borrow money from their depositors i.e. people having an account in the bank. Funds are directed towards home loans for personal and business purposes. Also, financial assets may be bought from such funds.
How does it help in achieving financial freedom?
The financial assets will offer returns that can be used in making your journey to financial freedom smooth and easier. You may wonder about the various forms of getting credit from the bank. Apart from the direct home loans, banks also undertake investment in securities like corporate shares and government bonds.
This is the process of creating money for financial freedom. It happens when the home loans are used to spread risk over a large number of refinancing options, in a way transforming the assets into money.
Financial freedom is not just about creating wealth. It is also about having liquid money to spend as and when required. This is exactly what is done by commercial banks that provide home loans refinancing.
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