Busting Mortgage Myths

Posted on March 11th, 2014 · Posted in News

In our belief that informed borrowers make better choices, here are 7 mortgage myths we can bust:

  1.  You can tell a competitive mortgage by its interest rate: Not always. Set-up and exit costs and ongoing fees add to the expense of a loan. When comparing mortgages, look at the comparison rate which takes all fees, costs and introductory rates into account.
  2. If your bank won’t give you a mortgage, no lender will. Lenders have different policies and criteria. A mortgage broker can often find you a lender.
  3. The best home loan rates are online. Online lenders may have competitive rates, but many borrowers need personalised service, so an online lender may not be the best option.
  4. Special introductory interest rates are the best deal. Lenders often use discounted, introductory or honeymoon offers to attract customers, but once the special rate is over, the loan reverts to a much higher interest rate. Always look at a lender’s comparison rate.
  5. It’s not wise to borrow outside the big four banks. During the global financial crisis, the government guarantee of bank deposits prompted this myth, but the guarantee extends to deposits, not loans. Some of the best deals are from smaller lenders, and now that the government has banned exit fees, consumers have the power to refinance to a better deal.
  6. You can save on your loan by correctly timing a fixed-rate loan. If we could predict interest-rate movements, economists would be out of a job. Variable rate loans generally perform better long term, while fixed-rate loans provide certainty for borrowers short term.
  7. Lenders mortgage insurance covers my repayments if I get sick. Lenders mortgage insurance covers you for nothing. It insures the lender in the event that you default on your loan and the property is sold at a loss.

As always, research & collect as much information as possible, ensure you know your own goals and, if you’re confused, consult an expert.  Why not contact us today for a FREE finance review to help you Strengthen Your Financial Future.

 

 

 

 

Original Story Source : The Age