Home Loan Myths Explained Pt.2 ✌🏻
5. I only need to save for a deposit 💰
Having a deposit ready for that property is just the start of the costs needed. There are some extra costs all buyers should be aware of. Other purchase costs you will need to save for include:
👉 Stamp duty
👉 Solicitor and conveyancer fees
👉 Building & Pest inspections (Optional)
👉 Lenders mortgage insurance (Borrow more than 80% of the purchase price)
👉 Loan application and establishment fees
6. LMI protects the borrower 🔐
Lenders' mortgage insurance protects the lender in the unfortunate event of you defaulting on your home loan.
Understandably there is confusion as you (the borrower) need to pay this. If you want to be insured as a borrower, then you can consider getting mortgage protection insurance.
You will usually only have to pay LMI if you borrow more than 80% of the purchase price and the more you borrow, the higher the LMI fee will be.
7. I’ve found the cheapest rate so I never need to worry 🤑
Lenders often use discounted, introductory or honeymoon offers to get customers in the door. Once the special rate is over, the revert rate is often much higher. It’s important to remember, lenders can move their variable rates at any time so a loan that’s competitive today might not be as competitive in a couple of years’ time. Make sure you review your loan every year or two to ensure that your rate is still competitive.
8. I won’t qualify for a loan. I have bad credit 🤔
You can still apply for a home loan and get approved with bad credit. Banks and lenders will always look at your credit history and rating when deciding whether to approve your loan application. If they understand your intentions and can see evidence that your days of living in debt are behind you then a specialist lender may be able to help.