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Mortgage Tips from North Sydney: Thomas busts the myths on mortgages and refinancing.
Lachlan Cottee
Recently, 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:
- 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 rates.
- 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.
- 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.
- 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 competitive rate.
- 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
Make 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.