Expert reveals the ‘mortgage myths’ and why you don’t need a 20 percent down payment to buy a house

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Real estate expert reveals the outdated ‘mortgage myths’ that keep first-time homebuyers from buying a home — and why you don’t need a 20 percent down payment

  • An Australian real estate expert has listed 10 common ‘mortgage myths’
  • Rhianna Farnan said buyers are often put off by what they “think” they need
  • This often includes a 20 percent down payment, no loans or debt, and a full-time job
  • But Ms Farnan told FEMAIL that these ‘requirements’ are not necessarily essential essentieel
  • Instead, you should have a 10 percent down payment, a stable income, and some savings

An Australian real estate expert has revealed the 10 ‘mortgage myths’ that are not always necessary to buy a home in today’s market.

Rhianna Farnan, manager and partner at Derwent Finance in Hobart, spoke to FEMAIL and explained how first-time homebuyers are often told they need a 20 percent down payment, a full-time job, a partner, and no loans or obligations to apply for a home loan — but this isn’t the case .

“This is essentially an outdated, old-fashioned way of thinking,” said Ms. Farnan.

‘Things have changed over the years, people don’t want to work full-time five days a week, but want flexible working hours.

“We are also seeing an increase in singles who want to settle and buy a home before settling down with a partner.”

Ms. Farnan outlined the three things first-time homebuyers should strive for.

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Rhianna Farnan of Derwent Finance in Hobart (pictured) explained how first-time homebuyers are often told they need a 20 percent down payment, a full-time job and no loans or commitments to apply for a home loan — but this isn’t the case

First, she recommended saving a 10 percent down payment with five percent for the cost of the house and the remaining five for additional costs, such as stamp duty and mortgage insurance (LMI).

She then said she had “real savings” in your bank account for at least three months and proof of stable income.

For those who rent, she said proof would also be required that you can consistently pay your rent on time.

Ms Farnan posted a video earlier this year counting down ten common things first home buyers 'think' they should buy a home

The 'mortgage myths' include the assumption that you need a partner, a lack of debt and time to buy a home

Ms Farnan posted a video earlier this year counting down 10 common things first home buyers “think” they should buy a home, which has since been viewed more than 159,000 times

Ten things you ‘thought’ you must have or do to buy a first home:

1. Must go straight to the bank

2 Time

3. No car loan

4. No obligations

5. A credit card

6. A partner

7. Perfect creditworthiness

8. A side job

9. A full-time job

10. 20 percent down payment

While the thought of buying a home may be daunting to first-time homebuyers,
Ms Farnan said the process is “not as difficult” as you might think.

Rather than going straight to the bank, Ms. Farnan strongly suggested consulting a lender or third party to offer a variety of options to suit you and potentially save you money.

“It’s important to find a mortgage broker or lender you trust and communicate with to understand what it takes,” she said.

Ms Farnan added that it is also vital to ‘know what you want and why you want it’ before buying any property.

Instead, Ms. Farnan suggested three alternative supplies that first-time homebuyers need and should have before visiting a lender

She recommended saving a 10 percent down payment, with proof of table income and three months worth of savings.

Instead, Ms. Farnan suggested three alternative supplies first-time homebuyers need and should have before visiting a lender — including a 10 percent down payment, proof of table income, and three months’ worth of savings.

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