Mortgage Traps to Avoid
Start off the New Year on the right foot by making sure you choose the right mortgage that suits your needs. Here are 6 mortgage traps to avoid:
1. Honeymoon rates that cost you long term. Watch for honeymoon rates that revert to high interest rates after 6 to 12 months. Any savings you achieve in the first year won't make up for the loss over the term of the loan.
2. Lower rates but higher transaction and account keeping fees. Do your sums to make sure that one saving doesn't outweigh the other. You need to consider the entire cost of the loan - not just the interest rate.
3. Paying for a loan that has all the bells and whistles when you don't use any of the added features anyway.
4. Restrictions on redrawing money or making/extra payments. These are handy options to have but don't assume they are part of your loan; there may be costs involved or approval may be required from the lender.
5. Not negotiating on interest rates and home loan features. There is often room for negotiation - use your mortgage broker to help secure a better deal with the lender.
6. Signing without a full understanding of the fine print. Again your mortgage broker can help by explaining the home loan's features and translating legal jargon into layman's terms.
Remember, if it sounds too good to be true, it probably is!