By Eleanore D. Sanchez
Independent mortgage advisor Justin Brand lists some of the common mistakes borrowers make that keep them from getting the best deal out of their mortgage.
- Sticking with your mortgage until the very end.
Brand explains that home loans can become uncompetitive in a few years or less due to changing market conditions, so it is best to review your contract every couple of years. He added that the increasing competitiveness in the market results in better loan features, so it is best to ask your lender for updates so you can maximize your mortgage.
- Setting your loan term for the longest period possible
The mortgage guru said that reducing your loan term by just a few years can shave off hundreds of thousands of dollars from your mortgage. “The longer the loan the more money your lender and broker make.”
- You did not examine rate comparisons carefully
Brand emphasizes that there are ways of getting around paying standard variable rate (SVR) if you make careful comparisons while shopping around for a loan. For instance, consider if a large discount on a high rate is actually more cost effective than a small discount on a low rate, he said.
- Focusing too much in interest rate
Brand stressed that interest rate is only one factor that influences the total cost of your loan. “Interest rates can change soon after your loan starts and you can quickly end up with a very uncompetitive and expensive rate. In addition, there are other costs that can make a loan significantly more expensive than it seems, based on the interest rate alone,” he said.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan