Buying your own home, whether it’s a family sized house in the suburbs or a cosy apartment in the city, has always been referred to as the great Australian dream. But, as home prices increase and wages sit dormant, there’s never been a more important time to consider your mortgage and if it’s right for you and your circumstances.
Many Australians are a little too relaxed when it comes to their home loan, and it’s not because they don’t have a genuine interest in finding the best deal for themselves. Instead, it’s more a case of not having enough confidence in making sound financial decisions that won’t cost them more than what they are currently paying.
Mortgage Myths Uncovered
To overcome this lack of confidence, home buyers need to understand the mortgage market better and to move beyond many of the myths that surround the industry. Some of the most common ones you’ll encounter are as follows:
1. The advertised rate is the only rate a lender can offer you – In most cases, the advertised rate is a starting point. So before taking out a mortgage or refinancing do your research. Look critically at the market. Know exactly what you need financially for a lender to gain your business. Sharpen-up your negotiation skills and ask a lender for their best rate. Don’t just be satisfied with the advertised rate.
2. I should be thankful to get home loan approval – If you’ve saved a sizeable deposit, have a good credit history and can afford to buy a home, then you have greater leverage when it comes to borrowing. Why? Well this means reduce risk for the lender. So use your leverage to negotiate yourself a better deal.
3. I don’t need a broker – Mortgage brokers help you to take the guesswork out of home loan comparisons. They often don’t charge you for their services and they can give you valuable advice. Plus, they’ll help you handle your loan application.
4. All home loan rates are the same – At any given time mortgage rates will differ by up to 2 percent between various lenders. So shopping around can make you a big saving long-term.
5. Refinancing is too expensive – If you do your homework and calculate your costs before refinancing you’ll discover exactly what you can save by refinancing. You need to think long-term and get a home loan that is at least 1 percent less than your existing home loan to make a saving.
6. I need a 20 percent deposit – You can still buy a home with less than 20 percent deposit. But, you have to be aware that it may cost you more as in most cases you’ll be required to pay lenders mortgage insurance (LMI) , which can add thousands to the cost of your mortgage.
7. Introductory rates are the best – Introductory rates are used as a draw-card so you’ll be enticed to use one lender over another. After the introductory period is over most lenders will often charge you more. Therefore, it’s important that you read the fine print and ask about the rate you’ll be charged after the introductory period. Then you need to work out if the mortgage package is such a good deal.
8. Once I get a mortgage I am set for life – If you’ve got a competitive loan today, this may change tomorrow. It is recommended that you review your mortgage at least every 2 years and compare it to other lenders.
Are you search for the right home loan for you? If so, then contact eChoice we can help you.