Chances are your home is your most valuable asset and for most Kiwis their home loan will be their biggest financial commitment (debt) and so it is important to avoid the biggest mistakes homeowners tend to make.
You don’t want to make a mistake that may cost you thousands of dollars or potentially put your family’s home at risk.
We look at six of the biggest mistakes homeowners make with lending.
- Going straight to your existing bank – most first home buyers and even many existing home owners believe the best option is to go straight to the bank that they have banked with. This is one of the most common and biggest mistakes homeowners make and people believe that the bank that they do their everyday banking with will treat them better because they are loyal. Of course going directly to the banks severely limits your choices and the banks will treat you no differently to anyone else – loyalty is not really a good reason.
- Having other debt. You need to be focused with your debt and home loan interest rates are generally the cheapest debt you can get, so consolidating any more expensive debt will help minimise interest costs plus it can make things easier to manage. The key is to get some advice on a strategy and how to structure your loans.
- Wasting your income. With the right strategy and loan structures you can make the most of your income to reduce your the interest that you pay. As mentioned , a home loan is one of the biggest financial commitment (debt) that you will ever have and you need to make the most of the income that you have.
- Fixing your entire mortgage. While there are some very good fixed home loan rates at the moment, if you choose to fix your entire loan you are also locking in how fast (or slow in most cases) you can pay off your loans. You lose the flexibility and your loan repayments will be locked into set payments when in most cases you should have a small part of your loan floating or as a revolving credit style loan so you can make additional payments or at least control the repayments that you make.
- Paying the minimum repayments. The banks will generally set up home loans over a 30-year term, and there is no benefit for the bank to ave you pay your loans off more quickly. It is profitable for your bank to allow you to have a mortgage as long as possible and to ‘sell’ you additional products such as credit cards, personal loans, insurances and investments including KiwiSaver.
- Trusting your bank without question. Be realistic – the banks are a business and the priority for the bank is to make money for the banks shareholders. Of course, sometimes a banks products will be the best option, but unless you speak to a good New Zealand mortgage adviser you will not know what other options there are within your existing bank, the other banks and even with the non-bank lenders.
If you can related to one or more of these six mistakes then I would recommend reviewing your mortgage with one of our advisers.
Avoid The Biggest Mistakes Homeowners Make
These are just six of the biggest mistakes homeowners make with their home loans, but there are many more less obvious mistakes too. As a homeowner you owe it to yourself and your family to ensure that you have a mortgage strategy that works for you.
Most Kiwis work hard to earn money, so you certainly do not want to waste money.
You have a choice – you can either continue doing what you are doing, or you can speak to one of our advisers to ensure that you are not wasting money. Our advisers can show you a strategy that can help you pay your mortgage off faster and therefore save you thousands of dollars.
Why not try to avoid the biggest mistakes homeowners make.
