If you’re taking out your first mortgage, you probably just want to get the paperwork done and dusted so you can move into your first home. That often means accepting the first mortgage package you manage to secure. By being actively involved in the mortgage process and taking the time to understand the finer details and compare offers, you can shave years off your mortgage repayments and save thousands of dollars. Here’s how you can take control of your mortgage.
Before you shop for a mortgage
Take the time to save up for a larger deposit. By boosting your savings and having a larger deposit up front, you’ll need to borrow less, effectively reducing your monthly repayments and the amount of interest you’ll pay over the full mortgage term. You may even be able to negotiate a better interest rate.
A larger deposit also means you start out with more equity so you’ll have more flexibility when it comes to refinancing a little further down the track. And finally, getting into a good saving habit each month and putting away money towards your deposit will help you be more disciplined when it comes to making your mortgage repayments.
Look after your credit rating
Building a good credit rating needs to start long before you decide to apply for a home loan. A good credit rating can mean the difference between being approved for finance or not, and can impact on the interest rate you qualify for.
Set realistic expectations
Before you even start house hunting, determine exactly how much you can afford. Use a mortgage calculator to work out what your fortnightly or monthly repayments will be and draw up a budget, adding in any unexpected expenses that you’ll likely be faced with as part of home ownership. Limit your house search to properties in this price range so you avoid being tempted into buying something you simply can’t afford.
Looking for a mortgage
It’s a good time now to get in touch with a Mortgage Adviser who will go over your financial situation and look at bank and non-bank options available to you. Even the smallest differences in rate can add up when you project the cost of your house and the interest payments over the full term. So you want to ensure you have the best possible home loan before you commit.
Consider your loan options
While a 30-year, fixed-rate mortgage may suit you as a first-home buyer, offering stable payments that are more affordable, make sure you understand the pros and cons of this type of loan compared to any others you may be offered. Do the calculations on the various loans available – it will likely be tough paying a little more up front each month with a shorter term mortgage, but you’ll save in the long run. Discuss your options with your mortgage adviser.
Understand the property market
Compare property prices in the area you’re considering buying in. How many properties are for sale nearby? How long are they staying on the market before they sell? This will give you a good indication of whether it’s a buyer’s market and how much bargaining power you’ll have, or whether it’s a seller’s market where you’ll need to accept the asking price before any other buyers do.
Now that you have your mortgage
Be alert for refinancing opportunities if interest rates fall, as you could benefit from restructuring your mortgage. And understand the cost that lengthening your remaining mortgage term can have on the total cost of your home. Taking control of your mortgage debt not only helps build your wealth, it will leave you feeling more secure in your home.
Get the right advice
Working with a mortgage professional like a Mortgage Express adviser, means you’ll get more choice when it comes to financial solutions, unbiased advice on the right mortgage to suit your lifestyle, and you’ll work closely with someone who can guide you through the mortgage process and help you make informed decisions. If you’d like advice around securing a mortgage for your first home or you’re considering re-financing, talk to us first.
