Many first home buyers are given advice from all directions on what to do, what not to do and which lender to use. But because everyone is different, what suits one may not suit another, especially when it comes to finding the right home loan.
Below are some errors that first home buyers commonly make and how you can avoid them.
Choosing the wrong home loan
There are many ways of finding a home loan, but the key is finding the right home loan to suit your needs and lifestyle. Many first home buyers are persuaded by banks, brokers or friends of friends that they can offer them the best deal.
Also beware of introductory rate home loans as they may look good on the surface but they aren’t necessarily a great deal for everyone. Most intro home loans offer lower interest rates, a honeymoon rate usually for the first year, but then they revert to a much higher rate for the remainder of the loan.
For instance, one of the lowest intro rate loans listed on RateCity has an advertised rate of 5.94 percent with Hemisphere Financial Solutions for the first 12 months, and then reverts to 6.94 percent for the remainder of the term.
If you compare this with the current lowest variable rate loan listed on RateCity at 6.29 percent by Carrington National, for a $300,000 mortgage you could save yourself $32,933 at the end of a 25-year term loan with the lower rate loan. This comparison is based on advertised rates so the rate may vary depending on your loan size and lending criteria.
Features you don’t use
Depending on what type of home loan you require and your circumstances will depend on what type of features you will need. Some financial institutions could attach a range of features that you may not use, if this is the case you could be paying extra for something you don’t need.
Alternatively, there could be features that you don’t have access to but need. If so, contact your financial institution and speak to them about making the change.
Avoid making the mistakes others have made by comparing home loans online to find some of the lowest interest rates available as well as the right features to suit you. As a first home buyer it is important to find the right home loan the first time to keep your repayments down and save yourself thousands over the term of the loan.