As mortgage advisers, we often hear and see information out there that is just not true!
There's so much information available these days and it seems that what might be true in other parts of the world, aren't necessarily true in New Zealand.
So...a quick list of myths we commonly hear and the truth behind them below!
Myth: You need a 20% deposit to get a mortgage.
Reality: While a 20% deposit is ideal, you can still obtain a mortgage with a smaller deposit, such as 10% or even 5%. There are some really good options in this space including the 'First Home Loan'!
Myth: A fixed-rate mortgage is always better than a floating mortgage.
Reality: There is no one-size-fits-all answer, as each individual's financial situation and goals are different. A fixed-rate mortgage provides certainty and stability, while a floating or variable-rate mortgage may offer more flexibility.
Myth: You can't get a mortgage if you have bad credit.
Reality: While having good credit is important when applying for a mortgage, there are still options available for those with less-than-perfect credit scores. That's why we work with a range of lenders to suit your unique situation!
Myth: You should always go for the mortgage with the lowest interest rate.
Reality: Interest rates are important, but they are not the only factor to consider when choosing a mortgage. You should also consider other factors, such as fees, features, and flexibility.
Myth: You should pay off your mortgage as quickly as possible.
Reality: While paying off your mortgage quickly can save you money on interest, it may not be the best option for everyone. It's important to consider your overall financial goals and priorities.
Myth: You can only get a mortgage from a bank.
Reality: There are a variety of lenders to choose from, including non-bank lenders, second-tier lenders and credit unions - A good mortgage broker will find the right fit for you! In most cases this is a main bank, but for others one of the above options might suit better!
Myth: You can't refinance your mortgage if your home has decreased in value.
Reality: If your home has decreased in value, it's still very possible to refinance your lending to another bank! There are provisions to allow this, even when you are in 'high LVR' territory.
Myth: You should always choose a 30-year mortgage term.
Reality: While a 30-year mortgage may provide lower monthly payments, it may not be the best option for everyone. A shorter mortgage term may result in higher monthly payments, but may save you money in interest in the long run.
Myth: You need to have a full-time job to get a mortgage.
Reality: While having a stable source of income is important, you do not necessarily need to have a full-time job. Self-employed individuals, freelancers, and part-time workers may also be eligible for a mortgage.
Myth: You don't need to worry about your mortgage once you've been approved.
Reality: Once you have been approved for a mortgage, it's important to continue to manage your finances carefully. This includes making timely payments, avoiding taking on additional debt, and keeping an eye on interest rates to see if refinancing may be beneficial. Your mortgage adviser will stay in touch for the lifetime of your loan and help you achieve your goals!
So...as you can see there are lot's of myths surrounding the world of mortgages! This is why it's super important you touch base with a mortgage adviser if you want to know what your options are. Everyone has a different situation so let one of our team assess yours, and provide you with the right advice...without the scary myths!