Need a loan? What to be aware of.

Untitled-1If you think you’ve found a home loan that sounds almost too good to be true, unfortunately, it probably is. Here we look at some of the traps you should look to avoid in taking out a mortgage (or any loan!).

Elkins Finance is a MFAA Approved Credit Adviser and available to talk you through your finance options if you are interested after reading this article, or know someone who would benefit.    Call 1300 355 467 or use the contact us form to request we contact you. 

Loans that seem too good to be true often are too good to be true.

Free lunches

In the mortgage market, you come to expect certain things. e.g If you have a small deposit, you’ll pay more over the term of the loan; that having a bad credit history is going to cost you; that certain loans have certain interest rates, etc. So if you’re offered a home loan that seems much better than normal, look closely at the fine print. Free lunches are as rare in home loans as they are elsewhere in life.

However if you can work out the real cost of the free lunch – it may still be a good offer. One of our panel has a deal where you end up with enough frequent flyer points for a return trip to London – not bad! But we will let you know the total cost and you can decide.

Interest rate fixation

Most people looking for a mortgage are preoccupied with finding the lowest interest rate. But have you considered all the fees and charges, and the account flexibility you need? You need to consider the entire cost of the loan – not just the interest rate.

This applied just as much with Car Loans, with many ultra low interest rate headlines in the car yards, and once you are there it is so easy to just sign up. The solution? Get pre-approved finance before you shop, Elkins Finance can help with that, and if the deal they have on offer is better – then you can still choose that – but you will have a real choice.

Elkins Finance will ensure that you are aware of all the charges involved and any restrictions on flexibility.

Ignoring mortgage fees and charges

Don’t ignore any fees or charges linked to a home loan; you never know how your circumstances may change. Upfront fees for taking out a loan and monthly fees are pretty easy to understand. But, are there other fees that you may incur? Will you be able to pay extra if you have a sudden windfall? Will you be charged if you decide to move or refinance your home loan? Can you increase your mortgage repayments?

Lack of flexibility

Different loans have different levels of flexibility i.e EFTPOS, internet banking, redraw facility. Ensure your home loan has all the features you want and don’t get locked into a Mortgage that will cost you if you change your mind.

Vendor financing

Some property developers offer “vendor financing”. This may seem attractive because you don’t have to deal with a lender, or because they’re willing to give you a loan when others won’t. But be careful you’re not paying above market rates – for the property or your mortgage.

The mortgage market is extremely complex, and getting what’s right for you is not as simple as finding the lowest interest rate. You need specialist help.

Elkins Finance is a MFAA Approved Credit Adviser and available to talk you through your finance options if you are interested after reading this article, or know someone who would benefit.    Call 1300 355 467 or use the contact us form to request we contact you.