Home buyers warned to exercise caution as borrowing reaches record highs
RACQ has urged homebuyers to do their research and exercise caution when borrowing, after new data revealed an influx of Australians committing to new home loans.
News.com.au reported Australia Bureau of Statistics data revealed new housing loans for December soared 8.6 percent on the previous month, with $26 billion added to the nation’s lending book.
RACQ spokesperson Lucinda Ross urged home buyers to do their research to ensure they were not borrowing more than they could afford.
“Government incentives and low interest rates have helped many people get into their home, but it’s crucial to use caution and carefully consider how much you’re borrowing as these rates won’t be around forever,” Ms Ross said.
“Before you commit to a loan, take a look at your individual circumstances and make sure you can still afford the repayments in the future should interest rates go back up.
“Buying a property is more than just the listing price. You also need to factor in upfront costs like stamp duty, building and pest inspection, transfer and legal fees, as well as ongoing costs like maintenance, insurance and rates, as these can all add up quickly.”
Ms Ross said borrowers should consider the comparison rate of a mortgage product when comparing interest rates.
"In most instances, on top of an advertised interest rate, there are other fees and charges like start-up costs or ongoing costs,” she said.
“To see the true cost of the product you should look at the comparison rate. This includes the interest rate plus other fees and charges relating to a loan – it will help you understand the true costs involved in purchasing a property.“If you’ve already bought a home and it’s been a while since you checked your interest rate, now’s the time to shop around for a better deal.”
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.