Common mortgage pitfalls to avoid

December 02, 2014
David Thomas

With hundreds of home loan products on the market and Australia’s lenders competing aggressively for market share, you would be forgiven for finding the whole home loan process a little bit overwhelming and confusing.

 

Indeed, many potential borrowers find the home buying experience confusing, which leads them to make some common mistakes, including: 

 

Failure to research

Savvy mortgage choices are made by researching different types of lenders, home loan types and the range of features available, as well as the documentation you will need to apply for a loan and what paperwork is involved.

 

As your local mortgage broker, I can work with you to find the right home loan solution for your needs. With access to hundreds of home loan products from our panel of 28 lenders, you can be assured of finding a home loan solution that is right for you both now and into the future.

 

Failure to budget accordingly

Without a budget, how will you know if you can stick to one once you have a mortgage? A budget helps you monitor spending and determine what mortgage repayments you can service. Furthermore, a good budget can help you when it comes time to apply for a home loan. Banks favour borrowers who can show they have genuine savings and can easily service their mortgage repayments.

 

Forgetting pre-approval

A loan pre-approval, which generally lasts for three to six months, provides assurance as to what you can borrow before you go property hunting. It is a terrible feeling to have your heart set on a property and find out you can’t borrow enough money to buy it. Pre-approvals also help at auction, when you usually have to pay a deposit on the spot if you are successful.

 

I can help you source pre-approval so that you can go property shopping with confidence.

 

Taking rates on face value

Many people fail to look past their honeymoon (introductory) period, which is when the interest rate on their mortgage is lower than it will be for the remaining loan term. If it hasn’t been budgeted for, you could be in for a shock. A clever move is to make mortgage repayments as if the honeymoon period doesn’t exist, so you’re prepared for its completion and ahead on your payments.

 

Paying for unnecessary extras

Have you ever had a friend, colleague or family member tell you about the home loan features you “absolutely must have”? If so, you are not alone. A lot of borrowers will choose a home loan because of the features it boasts, simply because they have heard that feature is handy to have. The reality is, additional home loan features sometimes come at an additional cost and every borrower’s situation is different, so what home loan feature may work for your friend, may not work for you.

 

For further information, and to put yourself in the best position with valuable information and guidance, contact a trusted consultant from Mortgage Choice on 07 3286 7711.

Posted in: Home loans

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