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Top 5 Myths on Home Loans Debunked!!

clock icon March 10, 2023
tag iconApplying for a Home Loan Home Loan Home Loan Myths Mortgage Broker

It’s no secret that the process of applying for a home loan can be daunting. With so many hoops to jump through and boxes to tick, it’s easy to see why so many people get anxious about the process. And if you’re not careful, all that anxiety can lead you down a path of misinformation. In this blog post, we’ll debunk some of the most common myths about home loans and show you how to increase your chances of getting approved.

Myth #1: You Need a 20% Deposit to Buy a Home

One of the most common myths about home loans is that you need a 20% deposit to be approved. While it’s true that having a 20% deposit will give you more borrowing power and help you avoid paying lenders mortgage insurance (LMI), it’s not a requirement. There are plenty of low deposit home loan options available, with the right lender for you. Additionally, especially for first home buyers, there are a couple of government schemes offered which allow you to acquire a property for less than 20% deposit. So don’t let this myth stop you from applying for a loan.

Myth #2: You Need Perfect Credit to Get Approved

Another myth is that you need perfect credit to qualify for a home loan. While having a good credit score will certainly give you a better chance of being approved, it’s not essential. There are many lenders who are willing to work with borrowers who have less-than-perfect credit. All you need to do is to shop around and compare your options to find a lender who is willing to work with your circumstance.

Myth #3: Self-Employed Borrowers Have More difficulty Getting Approved

If you’re self-employed, you might have heard that it’s impossible to get approved for a home loan. This simply isn’t true. While it may be harder to get approved for a loan, it’s certainly not impossible. There are plenty of lenders who are willing to work with self-employed borrowers. The key is to provide as much documentation as possible ( tax returns, bank statements, etc.) to prove your income and increase your chances of getting approved.

Myth #4: Fixed Rate Loans Are Better Than Variable Rate Loans

Some people believe that fixed rate loans are always better than variable rate loans. However, this isn’t necessarily the case. It depends on your individual circumstances and financial goals. If you’re planning on staying in your home for the long term, then a fixed rate loan may be the best option for you. However, if you’re planning on selling in the near future, then a variable rate loan could save you money in the long run.

Myth #5: You Need to Have 20% Equity Before You Can Refinance

Finally, some people believe that you need 20% equity in your home before you can refinance your loan. However, this isn’t true. There are many lenders who will allow you to refinance your loan with as little as 5% equity in your property, but keep in mind that there may be additional costs involved. So if you’re looking to refinance your home loan, don’t let this myth stop you from doing so and weigh your options if the added costs will still save you money.

Applying for a home loan can be a daunting task. But armed with the right information, it doesn’t have to be. At Successful Ways, our mission is to provide our clients with the best possible advice. This allows you to make informed decisions tailored to your specific needs and circumstance. Let’s take away the stress of uncertainty and provide you with the expertise from our two decades in this business. We are here to give you facts, solutions and get your home loan approved! No matter what challenges may arise, we will be here for you every step of the way.

Call us today at (02) 8234 8700 to have a chat. Or book a free home loan appointment at your convenient schedule!

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