Sourcing a mortgage has always been a challenge, especially for first time buyers who are unfamiliar with the terms and buzzwords the industry uses, and with so many lenders, it can be a struggle to compare. The terms of a mortgage can vary like the weather, and rather than accepting the first approval that comes in, it is prudent to search for something that is tailored to your needs. If you are about to get your foot firmly on the property ladder, here are some common mistakes that homeowners make.
- Over Commitment – If a person is a little optimistic on how much they can afford to repay every month, this can leave them financially strapped and that will have adverse effects on every aspect of their life. If you live in Australia, for example, and are looking for sound advice on finding the right home loan, you should talk to a mortgage broker, who can find the right lender.
- Not Using a Broker – There are people who think that by not using a broker, they can save money, when in actual fact, it is likely to be the other way round. The broker is not tied to specific lenders and would have an extensive network of reputable lenders – each with their own particular strong points – and the broker can use his experience and connections to source a home loan that suits your specific needs. If you would like some further reading on the benefits of using a mortgage broker, there are several informative articles that you can refer to.
- Rushing In – The saying, “Only fools rush in” might have been written with sourcing a mortgage in mind, and if one snatches the very first pre-approval without really considering the long term implications of the mortgage terms and conditions, it is only later that you realise how restricting the loan is. Sometimes, emotion takes hold and all a person can think about is moving in, and the sooner, the better. In that frame of mind, we are not focusing on the practicality and merely see the loan process as something to be completed ASAP.
- Overlook Maintenance Costs – If you are looking at your income – and more specifically, how much you can afford to pay on a monthly basis – you should always factor in building maintenance costs, which every homeowner must bear. It is not difficult to look at the size of the property and estimate an average yearly figure that would cover maintenance, then simply divide this figure by 12 and that is your monthly maintenance cost.
- Paying Too Much for Services – Using a broker is the best way to avoid service charges, as the mortgage broker receives a small remittance from the lender, and therefore the service is free for the borrower. Every salesperson is looking to make a commission, and in the mortgage industry, the salespeople can make very attractive commissions, and the borrower is the one who has to foot the bill.
If you want to avoid all of the above, talk to an established mortgage lender, (or even a reverse mortgage lender if you are age 62+) who, after listening to your needs, can source the ideal loan, and what’s more, the service is free!