Free Sample Report: Common Mortgage Mistakes
HOW TO AVOID COMMON MORTGAGE MISTAKES WHEN BUYING AUSTRALIAN REAL ESTATE. It is important to know how much you can afford to pay when looking to buy an Australian home or investment property. It's important to know how much you can put in as a down payment and closing costs when you apply for your mortgage to buy real estate in Australia. The more you put down the better rates and terms you're likely get. At the same time you also need to stay within your means and comfort level. Everyone is different; for some, borrowing 100% of the price of an Australian home causes them no sleepless nights. For others, they will not feel comfortable unless they are paying the loan off on their house or apartment, as soon as possible. Most of us don't shop for a mortgage very often. As a result it isn't something we become that familiar with. It is not a bad idea to work with a mortgage broker who is a specilaist with overseas buyers, and will take the time to answer your questions and uses terms you understand. Not all lenders have a range of options when it comes to investors. What if that lender doesn't offer the type of mortgage you need? Or worse yet, what if you need to change loan products after you've started the process? Working with a mortgage broker who has many different banks on their books enables you to address these issues without starting the process over again.
Mortgage regulations in Australia have changed significantly over the last few years, making your options wider than ever. Subtle changes in the way you approach your Australian home mortgage shopping, and even small differences in the way you structure your mortgage, can cost or save you literally thousands of dollars and years of expense. Industry experts have pinpointed these common mortgage mistakes that many overseas investors are making when buying Australian real estate. 1. CHOOSING THE WRONG TYPE OF REPAYMENTS Most investors, when looking for a mortgage loan to buy real estate in Australia, tend to only ask the bank about the "interest rate and the term". The Bank will quote an interest rate and how much they will lend and the term, and the investor will say "fine-lets do it". The bank will sign the investor up on a traditional home loan and the investor goes away thinking they negotiated a good deal.
|image2| The reality is very different. There are currently over 20 different Australian loan types, many of which are not suitable for investors. And the least suitable of all, is the one that 90% of investors sign up for! And that is the traditional "20 or 25 year, monthly repays home mortgage". This can quite literally be called a "deadly mistake", because you will end up paying back double what you borrowed for your Australian home or investment. So, if you are trying to build an Australian realestate portfolio and borrow 1 million dollars, you could pay back 2 million, or more, depending on the interest rate. No wonder the banks love these loans! The Bank love these loans, as during the first 5 to 10 years you pay back hardly any of the principal, it is virtually all interest! The good news is that there are several ways to pay off your Australian properties faster, providing you know what to do. The first way is to simply increase your repayments to fortnightly, instead of monthly. This simple strategy alone has the effect of saving you $150,000 in interest on a $300,000 mortgage (assuming a 30 year 8% mortgage). Interestingly, when you do the calculations, making weekly payments instead of fortnightly doesn't make much difference.
 There is a big difference between taking out a large loan to maximize leverage or to save your cash to buy more properties, rather than for future tax benefits 
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If you live overseas and the Bank can't offer you a fortnightly repayment, make regular lump sum payments to reduce the principal. Many investors opt for "Interest Only Loans". Mistakenly referred to by 90% of people as "Interest Free" loans (if only that were true!) these loans, as the name implies, means you only pay back the interest to the bank. Many people ask "why on earth would you bother with such loans?" In certain types of situations, these loans do have advantages. There is more on this in point 3. 2. DON'T TAKE A BIG MORTGAGE FOR YOUR AUSTRALIAN REAL ESTATE JUST FOR THE TAX BENEFITS. There are many people who have made tremendous amounts of money through investing in Australian property..... (The full Report (and many more like it) IS AVAILABLE ON LINE for our Subscribers. )
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