When it comes to choosing the right mortgage, how can you know you’re getting the best deal available to you?
No matter what advertising hype you’ve seen and no matter what ha worked well for your friends or family, there is no such thing as the best mortgage. There is only the right mortgage for you.
The reason is that no one else has the same financial situation as yours. Your income and your expenses are unique to you. Your spending habits and your repayments are also not the same as anyone else’s, so why would you do the same things they’re doing?
After all, the really low interest rate you saw advertised or heard about from a friend might sound ideal, but you might not qualify for it. Or you might discover that even though the rate is really low, they might have hidden fees and charges that make your costs even higher than going for other options.
How Do You Find the Right Mortgage?
The key to finding the right mortgage to suit your unique financial circumstances is to look carefully at your current income and your current expenses. Then consider what your future plans are going to be.
If you know you’re going to sell the house and move in a couple of years, then always double check what the exit fees will be on the mortgage you choose.
If your credit score is a little low right now, then perhaps shop around and compare the difference between paying more for interest rates and less for a house now. Then look at how much those numbers change when you take 6 months to increase your credit score. You might get a lower interest rate then, but will you be paying more for the house you want?
If you know you’re going to borrow using two incomes to meet mortgage servicing levels, but you know you want to start a family soon, then consider using only one income to work out your borrowings. This way you won’t struggle later.
Some people are attracted to the really low introductory rates the banks advertise. If your income only just covers these introductory rates, have you considered how you’ll afford the repayments once they adjust over to regular rates? If you’re unable to refinance in the future then you could face a lot of stress and trouble when this happens.
Who’s Selling You Your Mortgage?
When it comes to finding the right mortgage, most people simply go to their local bank branch or they call a mortgage broker. Your bank can only offer you the lending products they have available. They can’t offer you the great deal you saw across town from another bank.
Mortgage brokers are licensed to sell financial products from a wide range of banks. This does give you a lot more choice, which increases your chances of finding the right mortgage. Always remember that mortgage brokers are paid for selling you a lending product, regardless of which one you get.
It’s important to check that you’re really getting the right mortgage for you. The best way to do this is to ask plenty of questions. Be prepared with a list of things you want to know and be sure you get the answers you want.
