6 Misconceptions About Buying Your First Home
With all the information available to first home buyers, there are also quite a lot of misconceptions around purchasing your first home!
We’ve put together the top 6 (and the truths behind them) to put your mind at ease.
You should avoid fixed/variable rates
With flexibility and additional repayments on offer with variable rates, it’s no wonder many first home buyers consider this to be the best choice for them. On the other hand, a fixed rate offers the security and certainty of knowing exactly what your repayments will be each month. Alternatively, you can consider a split loan.
Pre approval is fine for any property type
If you have been pre-approved, the property type can impact how much the bank will let you borrow – if at all. Not all banks lend for inner-city properties, and may have restrictions on apartment complexes. Make sure you speak to your broker about this!
I need to pay off all my other debts before I can apply
Not all debts are the same. When it comes to buying a house, some debts can be helpful and others can be damaging. For example, student debt and debt on multiple credit cards can have a negative impact on your borrowing power. It’s important to speak to your lender about what types of debt can hurt your application before going ahead.
If I take a bad credit loan, I'll always be stuck with a high interest rate
It’s true; bad credit loans tend to come with higher interest rates - but that doesn’t mean you are stuck with it for the next few decades. Once you’ve ironed out your financial situation and improved your credit score, you can refinance your home loan to get a lower interest rate.
Only couples can get a home loan
No, you don’t need two incomes to get a home loan. If you’re able to pay a deposit and have good credit, there is no reason your bank will not grant you a loan!
I need 20% deposit
Actually, if you don’t have a 20% deposit, your lender may take out Lenders Mortgage Insurance on your loan. This is an insurance policy that protects them from the risk of the borrower defaulting on their repayments. The premium fee is passed on to you by being capitalised into your loan or paid upfront.
How we can help you through the process
Buyers who want the expertise of a professional should source a buyer’s agent, or a mortgage broker, to help them understand the market. Having the right information at your disposal can make the biggest difference to your journey as a first home buyer and save you a lot of money in the long term. Our team will take your unique financial situation and needs into consideration, and provide up-to-date, in-depth insight into the variety of home loan products available to you - not to mention, debunk myths about buying your first home.
If you’re a first home buyer keen to learn more about your home loan options, Zenrg Finance is here to help.
Contact us today!
Need some help with your a home loan?
Our mortgage brokers are available to help you. Enquire now.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.