I’ve been running
some Q&As with our local
customers in North Sydney, answering all their questions about mortgages. During this I’ve noticed that there are several myths and misconceptions
we have about mortgages,
so I thought I’d address the 8 most common:
1. Once I find a good rate, I’m sorted for the life of my
loan. False. Lenders
can move their variable rates at any time, so a loan that you think is competitive
today might not be quite
so competitive further
down the track. Therefore,
it’s important to make sure you take a look at your loan at least once a year
to check that you are getting the best rate possible. If you need assistance, your
local Yellow Brick Road mortgage broker in North Sydney can help you compare
2. It’s not worth refinancing a mortgage for an
improvement of half a percent. Wrong! If you have a $350,000, 30-year loan with
an interest rate of 5.24%, and you refinanced to a rate of 4.74%, you would
save $107 a month and $38,480 over the life of the loan. Think of all those future savings.
3. A competitive rate doesn’t really matter because the
Reserve Bank controls home loan rates. While, the RBA adjusts the cash rate
from time to time, each lender can change their rates as they see fit, which is why it’s vital you
check your home loan rate from time to time.
I can’t refinance a fixed-rate loan. Not true. You can in fact refinance a fixed
rate loan but you’ll be hit with a break cost. This break cost is compensation
for the loss the bank will incur when you leave. So, try to weigh up the break
costs versus the potential savings, and if the savings are more than the cost to leave the loan then you should
definitely consider switching.
5. I want to use a mortgage broker but what about the
fees? Mortgage brokering fees are paid by the lender, not by you. So contact one of our Yellow
Brick Road mortgage brokers who can help you find the best loan at the most
6. I’m too old to refinance my mortgage. Age
discrimination is illegal. A bank looks at your repayment ability, so they’re
looking at your income and the loan term. If you’re close to retirement, you
can look at shorter loan terms or alternative exit strategies.
Self-employed people pay higher interest. If you’re
self-employed and can’t produce your tax returns, you may be offered a low
documentation loan which can have higher interest rates. If your financials and
tax returns are in order, you qualify for the same rate as a regular PAYG employee.
Banks keep secret files on my credit history. Wrong.
All lenders use a credit reporting system to check your history. Know what they
know by finding out your history at www.mycreditfile.com.au.
Thomas Haggie’s Mortgage
Advice: Get Informed
sure that you are properly informed before you sign anything! It’s always best
to talk to your local Yellow Brick Road mortgage broker first as they can help
you understand what you’re signing up to and help you find the best deal on the
market. So make sure you come by our North Sydney branch today or give us call.