Loan Myths Busted

Purchasing a home can be a daunting process, especially with so much misinformation floating around. Let's tackle some of the most common myths about home loans and set the record straight.

Myth 1: You need a 20% deposit to buy a home.

Fact: While a 20% deposit can help you avoid Lenders Mortgage Insurance (LMI), it’s not a mandatory requirement. There are many loan options available that require as little as a 2% deposit. This flexibility allows more people to enter the housing market sooner, without needing to save a large sum upfront.

Myth 2: The lowest interest rate is always the best choice.

Fact: The lowest interest rate might seem like the most attractive option, but it’s important to consider the entire loan package. Some low-rate loans come with high fees, limited flexibility, or lack essential features you might need. It’s crucial to evaluate the overall benefits and costs of the loan, not just the interest rate.

Myth 3: Pre-approval guarantees your loan.

Fact: While pre-approval is a significant step towards securing a home loan, it is not a guarantee of final approval. Various factors such as changes in your financial situation, or the specifics of the property can impact the lender’s final decision. Always stay prepared for additional requirements or conditions that might arise during the final approval process.

Myth 4: You can’t get a loan if you’re self-employed.

Fact: Self-employed individuals can absolutely secure a home loan. Lenders may require different documentation to verify your income, such as tax returns or business financial statements. With the right guidance, self-employed borrowers can find loan options that suit their unique circumstances.

Myth 5: You can’t get a loan if you have recently changed jobs.

Fact: Changing jobs doesn’t necessarily hinder your ability to get a loan. Many lenders understand that job changes are a part of life and are willing to work with you. Some lenders even offer loans to individuals who have not yet started their new role, provided they have a signed employment contract.

Myth 6: Refinancing is too complicated and expensive.

Fact: Refinancing can be a straightforward and cost-effective way to manage your home loan better. With the assistance of a mortgage broker, you can navigate the refinancing process smoothly and potentially save money in the long run by securing a better interest rate or more favorable loan terms.

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