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Rushing into a loan? First home buyers’ mortgage regrets revealed
Paying too much in ongoing fees, not having an offset, or not having competitive rates have been named the top mistakes that first home buyers regret about their mortgage.
A new survey on first-time home buyers tackled the most common regrets they have about their mortgage.
The research revealed that 22 per cent of Australian first home buyers identified overspending on loan processing and ongoing fees as their biggest mistake.
The next most common pitfall was failing to secure a competitive interest rate, with 21 per cent of first-time buyers saying they regretted their current rate.
Similarly, 16 per cent of first-time mortgage holders said they should have chosen a loan with an offset or redraw option.
Additionally, 15 per cent of the surveyed said they regretted not understanding the product they signed up for more.
Across generations, the survey showed apparent differences in regrets.
For Gen Zs, 28 per cent pointed to high loan processing and monthly fees as their biggest misstep, and 38 per cent said they regretted not locking in a more competitive interest rate.
Among Millennials, 25 per cent admitted they didn’t fully grasp the loan product they committed to.
Nationwide, 13 per cent of first-time buyers across the country regretted not using a broker or using the wrong broker.
Six per cent of the surveyed individuals said they regretted asking family members for advice on which loan product to choose, while 6 per cent said they would no longer choose a fixed-rate loan.
Money.com.au’s mortgage expert, Debbie Hays, said that mistakes are bound to happen with first home buyers, especially as the market heats up and buyers rush to get their property.
She said that first home buyers have the habit of locking in with the first lender they approach, putting all their eggs in the same basket.
“Many first-time home buyers apply for a loan with the first lender they come across, often their existing bank or their parents’ bank. They haven’t yet built the habit of shopping around or getting advice from a broker,” Hays said.
Data showed that even a slight difference in interest rates and fees on a $600,000, 30-year mortgage can cost first home buyers tens of thousands of dollars over the life of the loan.
Similarly, a 0.2 per cent rate drop and lower fees could save first-time buyers over $31,000.
In their rush, Hays said first-time buyers often overlook fees, loan features, or competitive rates, only to realise later they could have secured a better deal or a loan better suited to their long-term needs.
She said that once first-time mortgage holders have a better loan-to-value ratio and a deeper understanding of loan products and features, they feel empowered to negotiate, often successfully having establishment fees waived on their next loan.
“That’s why we get a lot of first home buyers refinancing within a year of getting their mortgage,” Hays concluded.
