Home Loan Tips and Pitfalls to Avoid

Home Loan Tips and Pitfalls to Avoid


Are you thinking of getting a home loan for the first time? Take note of these tips and make sure not to fall into these traps.

Home Loan Tips

1) Save for a house deposit

Buying a home is an exciting and life-changing experience, but it all begins with saving for a down payment. As much as possible, aim for a 20% down payment because this will equate to a smaller loan. Plus, you'll avoid lender's mortgage insurance (LMI), usually a one-off fee added to a home loan. It covers lenders in the event that borrowers default on their loans.

2) Be realistic

Set realistic goals and don't borrow more money than you can afford. Give yourself some breathing room just in case there are changes in interest rates or your circumstances. Consider all of the expenses associated with purchasing a home. These will include legal fees, stamp duty, insurance, and building inspection.

3) Take advantage of low interest rates

Make sure to seek out the lowest possible interest rate. Since home loans are a long-term debt, even a little variation in interest can quickly mount up. For instance, even a 0.5 percent lower interest rate might save you hundreds of dollars over time.

4) Make fortnightly repayments

Making an extra month's payment each year will help you pay off your mortgage faster. If you're having trouble paying your home loan, talk to your lender immediately.

5) Talk to your trusted broker

With so many lenders to choose from, you might want to seek help from a mortgage broker to help you locate the best loan for you. Be honest with your broker and discuss your financial situation with them so they can help you find a home loan that suits your needs and lifestyle.

Home Loan Pitfalls to Avoid

1) Not reviewing your credit score

Check your credit report before applying for any loan. If your score isn't great, spend at least three months paying off your credit cards and any other debts on schedule.

2) Submitting too many applications

Each loan you make will hit your credit file and may negatively impact other lender’s perception regarding your credibility. “More entries, more chances of winning” doesn’t work when you’re getting a home loan so it best to find the right solutions for you first before applying to a lender.

3) Falling for marketing promotions

Lenders may try to entice you with irresistible offers that are too good to be true. Don’t fall for them. Before you know it, you’re trapped into a home loan with exciting honeymoon rates with higher interest rates in the end.

Choose the best home loan for you with Fastgrow Finance

Don’t hesitate to contact us. Our experienced brokers will work with you to understand your goals and find a lender that suits your needs.

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