- Posted 29 Feb
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As a first home buyer, it can be easy to fall into unforeseen traps when it comes time to look at getting a mortgage.
You don’t know what you don’t know, right?
It all starts with asking the right questions and then understanding the answers as they apply to your circumstances.
Once you know the type of loan you’re looking for, then working with a mortgage broker, like Australian Credit and Finance, will become a lot easier.
This is why we’ve written this article, so you can avoid making these common mistakes and ensure that you get the right home loan for your specific needs.
Let’s look at some of these common mistakes and how you can avoid making them too.
#1: Looking only at the interest rate
The top mistake we see first home buyers and other home loan borrowers make is focusing on the interest rate of a home loan only.
If you only focus on the interest rate, you could be making a fatal mistake by ignoring the other functions of the home loan, some which could actually end up costing you more money.
The features of a home loan are what you should be focusing on, as well as taking into consideration the interest rate.
By comparing home loans and using home loan calculators, you’re in a better position to ensure you get the right home loan to suit your exact needs.
#2: Not being prepared
If you scrimp on preparation, you’re only doing yourself a disservice.
The more organised you are with the paperwork you provide when looking for a home loan, the faster and smoother your home loan process is going to be.
This is particularly true for those who are self-employed. The more paperwork you provide to support your application, the less hold-ups you’ll have when it comes time to processing your official home loan application.
Don’t think you can just provide a few bank statements and you’re done. Provide full details of your financial situation and all other supporting documentation from the get-go to ensure that your home loan isn’t held up because of something that you haven’t provided.
#3: Not understanding a mortgage’s features
This can be an easy mistake to make, particularly if you’re a first home buyer and you’ve never had to look at a mortgage before.
Home loans come in all shapes and sizes, so it’s important that you understand the features of your home loan so that you can fully understand how they work.
Some mortgages might have an offset account, a line of credit or provide you with a credit card for day-to-day living.
Not all of these features are included with every mortgage, so it’s important to understand what will benefit your situation most — so that you can take advantage of tax deductions rather than getting stung come tax time because you didn’t fully understand how your mortgage works.
#4: Not seeking pre-approval
This is a common mistake a lot of first home buyers make, mainly because they are trying to navigate the home loan market on their own.
Utilising a mortgage broker right from the get-go will ensure that you don’t make this mistake.
If you don’t have written pre-approval from a lender, then you don’t have the money to purchase a home. Even though you might have used a home loan calculator to work out how much you can borrow, if you don’t actually have that written pre-approval, then you could lose your new home faster than Crocodile Dundee can say, “G’day mate.”
Now that you’re aware of these common mistakes, you can safely move forward with your home buying search.
If you need help with securing your mortgage or want to chat about the types of mortgages available for your specific needs, contact our team at Australian Credit and Finance today.