Lately I’ve been running Q&As with some of our local customers here in Darwin,
answering their questions about mortgages. I’ve noticed there’s a large number of myths and
misconceptions about mortgages that keep coming up, 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
are free to move their
variable rates at any time. This
means that a loan that might be competitive today may end up being less competitive
in the future. So, it’s important
to take a look and revaluate your loan at least once a year and make sure you’re getting the best rate.
2. It’s not worth refinancing a mortgage for an
improvement of half a percent.
Or is it? Suppose you have a $350,000, 30-year loan with an interest
rate of 5.24%, and you decided
to refinance it to a rate of 4.74%. You would save $107 a month and
$38,480 over the life of the loan. That’s a massive saving that you could easily take advantage of, so
speak to one of our mortgage brokers today!
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. So it’s crucial to make sure you
compare rates between lenders and see your mortgage broker to get the best deal.
4. I can’t refinance a fixed-rate loan. False! You can refinance
a fixed rate loan but you’ll be hit with a break cost, which is compensation
for the loss the bank will incur when you leave. Talk to your local mortgage broker to weigh up the
break costs versus the potential savings and see what you come up with. Unsure? Our Yellow Brick Road mortgage brokers here in Darwin are always
happy to help you out.
5. I want to use a mortgage broker but what about the
fees? Mortgage broking fees are paid by the lender, not by you. A mortgage
broker finds you the best loan at the most competitive rate, so pop by your local Darwin
branch and speak to one of our skilled mortgage brokers today.
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. Just remember, it’s never too
late when it comes to refinancing your home loan so contact one of our mortgage
7. 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
8. 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.
Mark Gilliam’s Top Mortgage Tip: Get
My parting advice: be informed before signing anything and
always communicate with your local
mortgage broker. Most lenders would rather find you a better deal than
lose you as a customer. If
you have any questions or would just like to chat about how we can help you
refinance your loan, make sure you give our Darwin branch a call today so we can
help you save for tomorrow.