Your financial decisions can greatly affect your daily living most especially if you are planning on availing of a mortgage package deal. Once you have decided on getting that mortgage loan, you need to fully understand what you are getting yourself into.

1. Avoiding Mortgage Traps
© The Mortgage Gallery Rockingham

2. Your financial decisions can greatly affect
your daily living most especially if you are
planning on availing of a mortgage
package deal. Once you have decided on
getting that mortgage loan, you need to
fully understand what you are getting
yourself into.
Fees and Charges
Home loans normally involve various fees
and charges. You will be surprised at how
these fees can easily add up. Thus, it is
important to have a good understanding
about what these charges are. Loan providers can charge you with an application fee
for more or less than $600, including the valuation fee for at least $300 and a loan
settlement fee for $200 or more. Also expect that you will be paying for the mortgage
insurance. This is a standard procedure particularly if you will be borrowing over 80% of
your new home value. Hence, this can cost you over 2% of the loan cost.
There are also fixed monthly fees and other related charges from using the loan and on
what has been stated in your contract, lenders or loan providers can increase these
monthly fees any time. An Early-Exit fee depends on the lenders guidelines and can
have names like “deferred establishment fees”. These charges are important and you’d
most probably wish to pay off your loan or decide on re-financing it to another potential
lender.
Ask the potential lender for the exact costs and early-exit fees. Put in mind that if
possible, you need to negotiate with the lender to lessen the existing fees to and to
somehow reduce your loan amount as well. In case you are not good at negotiating, you
might as well hire a mortgage broker to help you secure an ideal deal.
Extra Payment Limitations/ Re-draw
There are loan types that may limit you from having additional repayments into your
mortgage account. This is essential since it will let you put money into your loan and
will lessen your interest charges. There are certain loans which permit you to pay extra
© The Mortgage Gallery Rockingham

3. repayments but limit you from redrawing the certain amount of money. Always
determine if you are required to apply the loan through writing, how long it might be
approved and find out if there are any charges required.
Honeymoon Loans
Borrowers must be cautious when dealing with the so called “honeymoon loans”. They
might sound great and competitive for six to twelve months of your loan but the truth is it
can only lead you to unexpected fees when they regress to a higher rate and will
obscure the standard variable rate.
Bells and Whistles loans
Numerous loan types are out in the market and you will be attracted because of the
interesting features, before you do that think twice and contemplate if you really need it.
Paying extra charges for a home loan which has bells and wishes is just a waste since
you will not be using some of its features.
Not negotiating
Most of the time, home loans are not laid down for the borrowers need to make them
realise that they need to negotiate with the loan providers. One of the best things to do
before signing any loan agreement is to make a research. Try as best as you can to
gather all the necessary information you need for your preferred loan. Otherwise, you
can always ask the assistance of a licensed mortgage broker.
Interest rates
Do not accept interest rates at the original amount or face value, try to discuss with the
lender if you can possibly have lower rates. Once you achieved low rates, it will be a
great help in reducing further expenses for the life of your loan. With regards to fixing
your interest rates, beware of the increased break costs. This is a big factor which you
need to look into and perhaps you want to revert it into a variable rate. This includes
paying all the lost interest rates to the loan provider if you have already paid the higher
rate at the end of the fixed loan term and will accumulate into a significant amount of
cash.
© The Mortgage Gallery Rockingham

4. Sealing the Deal (On-the Dotted Line)
Most importantly, do not sign any document which you don’t understand or are not sure
of. If you are doubtful, try to seek a financial or legal adviser. Searching for the right
mortgage may take you more time, but getting the right one will help you save more
money and be constantly stress-free.
© The Mortgage Gallery Rockingham