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Tags: ComparisonVariable / Fixed | 26.11.15

4 Typical Misconceptions About Home Loans

If living with your parents is cramping your style, or if arguing with your flatmates about whose turn it is to take out the garbage is driving you crazy, it’s time for you to think about buying your own home. We know, scary thought isn’t it! Most Australians cannot afford to pay cash up front for a home, so chances are, you are going to need a home loan. For people who have never gone for a loan before, or, not a loan that they will be paying off for the next 30 years, it can be a very daunting process. Well, before your start shopping around, we are here to sort the home loans facts, from the home loan fiction.

No one will give me a home loan because I am single

FICTION

That is definitely not true. Lenders will provide home loans to any person who can afford to make their loan repayments. So long as you have a steady income and decent credit history, you won’t have a problem.

I have to have a deposit before I can go for a home loan

FACT

Though, while most people will tell you that you have to have 10% to 20% of the deposit, you can get a loan with 5% to 10%. However, with a deposit of less than 20% you will have to pay the Lenders Mortgage Insurance. It is advised that you scrape together as much of a deposit as you possibly can.

Paying monthly repayments is the same as paying fortnightly

FICTION

This one will blow your mind. When you pay fortnightly instead of monthly, you can actually slice years off your home loan and save yourself thousands of dollars in interest. Fortnightly gives you an extra payment a year, meaning your loan is paid off faster, and you aren’t paying interest on those extra years. Do the maths yourself and you will see quite a difference.

You have to choose a home loan with your current bank

FICTION

Your bank may have provided you with excellent service over the years, however, they may not have the best home loan for your needs. Not all home loans are the same, and every bank or lender has different policies and interests rates. It really does pay to shop around and find the one that best suits you.

Now you have sorted the facts from the fiction, you can start looking for the right home loan to suit your needs.

Back « 5 Ways to Save for a Home Deposit
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