Owning a home is the Australian dream, but the Australian dream is an increasingly complex one to achieve. Along with saving a deposit, navigating the mortgage market and learning how to understand interest rates, insurance and everything in-between, the average person can be forgiven for not being well-versed in real-estate jargon. In fact, research by UBank has found that 85 per cent of Australians don’t know their home loan rate. Furthermore, the same report found that 54 per cent of Australians claim their financial situation is causing them stress, while 33 per cent are worried about their future.
Purchasing a home is one of the biggest investment, and commitments, most of us will ever make, so it’s important that you understand some of the main aspect surrounding home ownership before you jump in head first. Here are some myths we’ve busted just to get you started, Remember, when buying a home, it’s always best to consult a financial professional first.
Myth #1: You shouldn’t take out a loan with an institution that isn’t strictly a bank
All mortgage lenders must abide by the same consumer credit rules and regulations as any bank, so you can rest assured knowing that as a borrower, you can expect the same rights and services that you would of a bank.
Myth #2: Weekly repayments are better than fortnightly
This is pretty much no difference between making your payments weekly or fortnightly. To make a true difference, the best thing you can do is squeeze in one extra repayment each year.
Myth #3 you need a 20 per cent deposit to get a mortgage
According to the Reserve Bank of Australia, some lenders can accept a 5 per cent or 10 per cent deposit, and Lenders Mortgage Insurance can also reduce the deposit required. However, in some cases, this may result in larger repayments and interests costs.
Myth #4: Being pre-qualified means your loan is secured
This isn’t true. The purpose of being pre-qualified is to confirm that are you eligible to borrow, it does not mean your loan is approved.
Myth #5: You only need to save for a deposit
This is not true. In addition to saving a 20 per cent deposit , you will need to save for pest and building inspections, loan establishment fees, stamp duty, solicitor and conveyancer fees, moving expenses.
All the advice in this story is general in nature and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
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