Common Mortgage Mistakes

Mortgage Broker

Avoid making the 11 most common mortgage mistakes made by borrowers...

There is more to any type of home, investment or commercial mortgage than interest rate.

Interest rate is an important consideration but it is a common mistake most borrowers make when choosing a mortgage. There are many other factors that can add significantly to the cost of a loan - far more than interest rate alone. Below is a list of factors you must take into consideration to avoid making any of the most common mortgage mistakes..

1. Entry Fees

Varies from lender to lender and can be anything from $0 to $1,000 plus dollars.

2. Mortgage Insurance

This varies significantly from lender to lender and can vary by thousands of dollars.

3. Ongoing Fees

Some lenders charge up to $500 yearly for some loans.

4. Early Exit Penalty Fee

Paying out a loan within the first 5 years can cost hundreds if not thousands of dollars with some lender.

5. Discharge of Mortgage Fees

Exiting your loan at any time can cost up to $1,000 with some lenders .

6. Can I Make Extra Repayments

The quickest way to save on interest repayments is to make extra repayments and pay your loan earlier. If you cannot make extra repayments a low interest rate loan may not be as attractive as it seems.

7. Offset Accounts and Redraw

These features offer flexibility and can be valuable tools for reducing your mortgage quicker, however, these features can cost extra in the way of fees or higher interest rate.

8. Redraw Fees

If you are ahead of your loan repayments you may be entitled to redraw these funds. These fees can be as much as $50 per redraw.

9. Fixed Rates and Break Costs?

- Many people do not understand that there are many restrictions applied to fixed rate loans such as making extra repayments and redrawing from the loans account. Also, there can be sever penalties for breaking a fixed rate contract early. Sometimes this can cost into the tens of thousands of dollars.

10. Is My Loan Portable?

Portability allows you to transfer your loan from property to property without incurring the excessive fees of closing out a loan and applying for a new one.

11. Is My Loan With a Reputable Lender?

Lenders that have been in the mortgage market for a short while may not offer the same level of service or ongoing competitive pricing.

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