The Australian Bureau of Statistics puts the total number of owner occupier home loans in Australia at 54,807, with an average value of close to $370,000. That's a huge chunk of change, so if you're about to buy property and become part of that statistic it's vital that you avoid making mistakes and paying more for your mortgage than you have to.
To help you get your home loan right the first time – and every time after that – we've had a close look at four common mortgage mistakes. Avoid making these errors and buying and paying off a home could be less stressful and even more affordable.
1. Sticking with your loan for the entire term
Sticking with a home loan for 30 years is a gigantic commitment. Interest rates go up and down and market conditions change all the time, so every two or three years it's a smart idea to review your home loan to ensure that you're still getting the best deal possible.
For example, if you secured a home loan early in 2015 when the cash rate was at 2.5 per cent there's a chance your interest rate is higher than what's available now. A decrease of just 0.5 percentage points on a $370,000 loan over a 25 year term could save you over $30,000 in interest repayments. That could be enough for a deposit on a holiday home or perhaps a new car!
Avoid making these errors and buying and paying off a home could be less stressful and even more affordable.
2. Focusing on interest rates alone
When shopping for a sports car, horsepower's not the only thing you need to consider. It's important – but you also may be looking for a luxurious interior, a swish paint job and perhaps a convertible roof.
Your mortgage is exactly the same, although maybe not quite as exciting – the interest rate is just one part of the whole package. You'll also want to find something with low fees, suitable repayment terms, portability and a range of other helpful features.
It can be a little intimidating navigating the jargon and technicalities of it all, so the mortgage advisors here at Advantage Finance are on call to simplify and help you make the right home loan decisions.
3. Paying break costs
If you're locked into a fixed rate loan and you repay it early or refinance you may have to pay break costs. The amount will depend on your specific loan, however, it's not uncommon for these costs to number in the thousands or even tens of thousands (say goodbye to that car).
Luckily they can and should be avoided. If you're unsure whether you're going to stay in the home you purchase for the fixed period of a loan then a variable rate may be more suitable. Alternatively you may be able to find a fixed rate loan that's portable and merely be transferred to your new property if you move.
4. Shopping with just one lender
There are hundreds of car dealerships in South Australia. When shopping for a new car you shouldn't buy the first one you see, instead you should survey all your options and pick something with a price and features that suit your needs.
Advantage Finance specialise in helping you do exactly the same for your mortgage. We have access to over 30 lenders and can provide you with a wide selection of mortgages, all with different rates and features.
With us you may be more likely to find something that suits your needs, instead of just picking any old home loan off the yard. Get in touch today.