Common Myths of Home Loans in Australia Unmasked
Most first home loan borrowers continue to make mistakes when buying homes or properties. That usually happens because people lack the knowledge of home loan lenders and other underlying factors concerning Home Loans by Loans.com.au in Australia, which cost borrowers money. The article seeks to unmask some myths to enlighten borrowers looking for home loans in Australia.
Bad credit history doesn’t matter
Most borrowers believe that as long as they paid off the bad debt, their credit history is null and void. The truth is that a patchy history haunts borrowers regardless of whether or not they paid the debt. Even if the bad debt is old, a small amount or just a one-off, it will haunt a borrower looking for home loans in Australia. Credit reporting agencies keep records of the debts including mobile phone plans, defaulted credit card payments, and missed payments. Lenders of home loans consult the agencies to get credit history of loan applicants before they complete their loan application.
Assets are the same as income
Borrowers tend towards believing that strong assets can substitute income when servicing home loans in Australia. However, the borrower’s capacity to repay home loans through regular salaries is what makes the difference. The amount of income a borrower has is what determines the amount of money they can borrow.
Personal debts can be rolled into home loans
Most home buyers have a myth that debts such as credit cards and car loans can be consolidated into their home loans in Australia. You don’t want to put all your eggs in one basket, especially with your first home. It is advisable to first build up enough equity before rolling your debts into the mortgage.
It is the credit card balance, not the limits
Borrowers have the myth that the limits of their credit cards count rather than their credit card balance. Well, when applying for home loans in Australia, every type of credit a borrower has in their name is used by lenders to calculate their ability to service home loans regardless of the credit cards’ balance. Borrowers who have less credit and other loans stand better chances than those with a higher credit for their applications for home loans in Australia.
Making repayments minimum and monthly is a good strategy
Home loan’s interest is calculated daily, and borrowers pay the home loans monthly. You can check it out yourself if you use a Home Loan Calculator at Loans.com.au . Borrowers who pay their home loans in Australia pay less interest over the loan’s life as compared to borrowers who don’t pay interest regularly. Consequently, such borrowers reduce the life of their home loans in Australia and they also save their interest rates.