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Lending Myths Pt.3

Lending Myths Pt.3 👾

9. Best home loan has the lowest rate 🏦

Not necessarily. Whilst a low-interest rate home loan may be able to help you save money, it’s not the only cost you need to consider. There are other costs you need to factor in, such as set-up costs, exit fees, monthly charges and other ongoing fees which will significantly affect the amount that you pay for your mortgage.

This will vary depending on the lenders product and what your intentions are. Also, it is very important to base your choice on your own financial needs and goals now AND in the future.

Also purely focussing on the rate vs included benefits may not be best. For e.g. you may want a lender that gives you an offset account or allows you to borrow more/less.

10. I don’t need an income if I have assets 🙄

Whether you have a number of assets or not, you cannot be approved for a home loan on assets alone. Lenders complete a holistic assessment to meet all of their criteria, including reviewing your credit history, loan purpose and well as income to see that you have a regular income source to meet the repayments. Your income is key to help determine how much money you are allowed to borrow.

11. Interest only repayments are bad 🚫

An interest only mortgage is particularly good if your budget is tight or if you want to free up cash to allocate to more important or exciting goals - like building an investment portfolio!

It's more beneficial for Investors as they can claim interest as a tax deduction or for those who plan on holding onto the property for a few years before selling. It depends on what you're trying to achieve so make sure your mortgage broker offers the right product and lender.

12. You have to pay the broker to lodge and manage the loan application 🤥

The majority of brokers don’t charge any fees because they are paid by the lender.

Using a mortgage broker is one way to streamline the research as they will have access to a wide range of loans from different lenders and understand the home loans market. This doesn’t affect your interest rate or fees and can generally get you a more competitive loan.


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