For most people, buying a home is the single biggest investment that they will ever make and, having raised the money to buy a property, they will then spend the next 30 years, or more, repaying it. Unfortunately, 30 years is a very long time and, as the economy will probably go through more than one cycle of boom and bust in this time, it is important to ensure that you are paying as little as you can for your property now, to give you room for manoeuvre if interest rates rise, and the value of your property falls, in the future.
It is human nature to be optimistic and, in the excitement of buying a property today, it is unlikely that you will think too deeply about the possibility that circumstances will change in the future. However, when the property market started to decline in the United States in 2007, a growing number of families found themselves facing difficulty with their mortgage repayments. Indeed, in the 5 years following the start of the current housing crisis, no fewer than 4 million families lost their properties as a result of foreclosure.
We can never know what the future will hold, but we can take steps to protect ourselves by shopping around today when buying a property, to ensure that we get the very best deal possible.
In the first instance, that means not overreaching and trying to buy a home that will stretch you to the limit when it comes to making monthly repayments. Far too many people are tempted to pay a little more than common sense tells them they can really afford and, while many get away with this, some run into problems quite quickly. Work out how much you can comfortably afford to pay, and then go shopping.
The second most important thing you can do is to use a mortgage broker to compare home loan interest rates across a number of different lenders. There are all sorts of costs associated with buying a property, but it is the interest rate on your loan that will have the greatest impact on your repayments over the years. Select several lenders to approach directly, and also consult one or two brokers, and compare the rates offered by your chosen lenders so that you can draw up a short list. From your short list you can then look in detail at each lender and select a loan that best suits your needs.