The property market in Australia is booming, and that is making it more difficult for first-time buyers to get a foot in the door. The good news is that you don’t have to be made of money in order to purchase your first home. Instead, you need to find a well-framed mortgage offered by a reputable lender.
Along those lines, if you are on the market for a new home, you’re no doubt anxious to find the best deal possible. This applies to both the property and the mortgage that finances – both need to be top-of-the-line products. And while it’s easy to assume that a mortgage is easy to weigh on its own merits, the truth is that there are a range of different home loans on the market – and not all were conceived with the buyer’s best interests in mind.
To give you an idea of the breadth of mortgages available, here are a few of the variables you’ll encounter when shopping around for the best loan:
- Interest rate: The portion or percentage of the money owed that is paid to the lender over the life of the mortgage
- Closing fees: The amount you pay when the mortgage and property purchase are finalised
- Adjustment features: How the interest rate adjusts over time (assuming that it isn’t fixed-rate)
- Points: A fee (one point equal to one per cent of the loan total) that the borrower pays in addition to interest.
The above are amongst the most common variables attached to mortgage, and they often come together in a variety of combinations. For the remainder of this post, we’ll attempt to demystify the loan-selection process by providing a few tips and considerations that are worth taking into account.
The following are two essential steps that every prospective home buyer should follow when looking for the best mortgage:
1. Invest plenty of time in shopping around
Your house is likely to be one of the most significant financial investments that you’ll make in your lifetime. Keep that in mind when you’re shopping around for the best mortgage. Given the size of your financial investment, it’s a good idea to invest plenty of time and thought into the selection process. Far too many home buyers end up speaking to only one lender (or broker) without comparison shopping. This can end up costing you a sizeable amount of money in the long run.
2. Review the mortgage contract before signing
Mortgage contracts are complex legal documents, and they can be fairly confusing. As with any major purchase, you’ll want to be sure you’ve read the fine print. In the case of a mortgage, it’s a good idea to let a friend or family member have a look at the contract after you’ve pored over it. Even better – if you have an attorney, let them have a look before you sign.
Above all, don’t forget that most sale contracts include a cooling-off period, during which time you can walk away from a legal agreement to buy. Specific laws vary from state to state. But if you’re starting to doubt that you made the right decision, you may be within your rights to change your mind.