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November 23, 2016

A Guide to Your First Ever Mortgage

Buying a house or an apartment for the very first time can be a daunting prospect, especially when you think about the numbers involved, but after studying this short guide you will hopefully find the whole process just a little bit easier. In it, we look at some facts concerning your first ever mortgage.

What to Consider When Applying for Your Very First Mortgage   

Before you fill out your application, consider the following facts carefully. Once you understand what is involved, you will be better placed to make informed decisions concerning your first home loan.

  • Bigger Deposits Are Better – It might seem like a good idea to go for a home loan with the lowest deposit requirement possible but the more you pay upfront, the lower your monthly repayments will be and the lower the total cost of your loan will be. You are charged interest on the money you owe the bank on a daily basis so the less you owe, the less you will pay. Whether you approach local institutions yourself or ask your home builder in Perth to help you find a mortgage provider, put down as big a deposit as you can afford. 
  • Fixed vs Floating Interest Rates – It is possible to fix the rate of interest you pay on your mortgage for the first 2-3 years when dealing with certain lenders but whether this is desirable will depend on your view of the economy. If you believe interest rates are likely to go up in the near future, you may wish to opt for a fixed rate loan. If not, variable is probably the best way to go. You should bear in mind that if you choose a fixed rate mortgage, you may be hit with an exit or break fee if you decide to move lenders before the fixed period of your loan is over. 
  • Searching for the Best Deals – Only you will suffer if you choose the wrong mortgage so make sure that you spend a reasonable amount of time researching all your options. If you are having a new property built for you by a home builder in Perth they can almost certainly, as mentioned above, help you to find willing lenders. However, the responsibility for finding the best deal still lies with you so exercise due diligence when choosing your home loan provider. 
  • Insist on a Pre-Purchase Inspection Report – Hire an independent building inspector to go over potential purchases with a fine-tooth comb before you make any binding agreements. Older properties are more likely to have potentially costly issues than new builds but whatever type of house you are planning to buy, you should have it inspected. If you don't, you could end up with a large mortgage on a home that costs you thousands of dollars in maintenance and repairs over the years.

The main message to take to heart when applying for your first ever mortgage is that you must take responsibility for the decisions you make because they could have serious, long-term consequences.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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Item Reviewed: A Guide to Your First Ever Mortgage Rating: 5 Reviewed By: EconMatters