Mortgage articles on home loan mortgage and interest rates.

Mortgage Myths

Mortgage myths are the false beliefs that hold people back from achieving their dreams of homeownership.

These are the ten biggest mortgage myths that stand in the way of home buyers and mortgage strapped homeowners owning their homes sooner.

• Myth #1. A big brand bank home loan is better than a mortgage from non bank lender.

Most people don’t like the major banks, but this myth prevents them from capitalizing on the mortgage opportunities in the growing non bank area.

• Myth #2. A bad credit history means you can’t get a home loan.
  It is better that you have clear credit when you apply for a home loan because it improves your chance and options.

But there are great loans for people with bad credit, and they can get better as your credit improves.

• Myth #3. To get a home loan at the best mortgage rates you need a 20 per cent deposit.

A 20% deposit on a home loan is a wonderful start, but today 100% home loans are there for the taking for people with excellent credit.
Even for the self employed with no income checks we have up to 95% mortgage loans!

• Myth #4. 100 per cent mortgage finance or a no deposit home loan means that you need no money for the transaction yourself.

Buying property has other costs besides the home loan. These costs include stamp duty and Mortgage insurance, and you should allow around 5% for these costs for a high lend mortgage loan.

• Myth #5. The lowest mortgage interest rate means the best loan deal for me.

This is rarely the case. Low rates usually mean loss of valuable flexibility and higher fees and charges, or open ended fees and charges increases.

• Myth #6. A lower fixed mortgage interest rate is a better deal than a higher variable rate.

The truth is that market forces set the interest rates, and people that have fixed their rates in the last 10 years have lost money. If the fixed interest rates are lower now that is because the people that know are betting that variable rates will be falling.

• Myth #7. Your car loans and credit cards can’t be rolled into a new home loan.

We can do 105% loans today and higher, so a small amount of personal loans can be consolidated even into a new mortgage, but at a higher interest rate. We don’t however recommend this strategy, because we believe that everyone should own their home sooner. Getting loaded up with debt is not the way to do this.

• Myth#8. Mortgage insurance is compulsory and can be around 2% of the loan amount.

Non conforming lenders offer mortgage home loan finance with no mortgage insurance, so these may be a better option for you.

• Myth #9. A standard variable rate loan on a principal and interest repayment is the best way to pay off a home loan.

The best way depends on your financial goals and your money management skills. Most people who want to get ahead and have the income and desire to buy investment property are better off using a line of credit facility. This is an interest only facility with minimum repayments.

• Myth #10. Its better to leave your mortgage with the bank.

When everyone believed this the banks were charging over 2% more interest for their money.

Competition from non bank lenders has forced the banks to lower their rates. Supporting the non bank mortgage lenders will help to keep rates low and makes sense for us all.

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