If you’re a single woman and the prospect of finding a mortgage leaves you overwhelmed don’t feel alone – most women feel just like you. Jackie Pearson reports there are some positive steps you can take to become more confident about choosing a home loan.
September 10, 2009
Australian women are still lagging way behind men when it comes to their confidence about money, including home loans. According to research conducted by ANZ earlier this year it is quite common for women to:
- Lack confidence about their future financial stability: 60 percent of the 1200 respondents aged 18 and over said they needed to do more to achieve future financial security;
- Not think about their financial future or “hope to find Mr Right to take care of it” (15 percent);
- Be too overwhelmed or not know how to begin to put a financial plan in place (55 percent of respondents);
More than a quarter of the women surveyed admitted to living from pay-to-pay with very little savings and this increased to 34 percent for single women.
No time like the present
If you find yourself quietly admitting that the prospect of finding and applying for a home loan leaves you overwhelmed and scared there are many positive steps you can take to build your confidence and make savvy long-term financial decisions.
There is a strong connection between not owning your own home and living in poverty in old age and this is particularly so for single women so the sooner you get started on achieving the goal of home ownership the better.
Save, save, save
The first step is to knuckle down and save for a deposit. This will mean getting on top of your household expenditure, getting rid of expensive bills, taming any wildly out of control credit cards and being able to prove to a lender that you are capable of saving a deposit and paying off a loan.
Research, research, research
The other critically important thing you can do is shop around, compare available deals and read the fine print to ensure you end up with the best possible loan for your situation.
Rather than falling into the trap of depending on the advice of the neatly attired gentleman behind the desk at your local bank branch, use the internet to shop around for a home loan with a competitive rate and winning features.
You could end up being years in front of even the most money confident male! For example, look what happens if you go with the cheapest standard variable home loan currently available, with an average annual percentage rate (or comparison rate) of 4.89 percent p.a. instead of one of the most expensive variable rate home loans currently available with a comparison rate of 6.48 percent.
Your monthly repayments on the low-rate loan would be $1,445 on a $250,000 home loan over 25 years. By comparison, your repayment on the expensive loan would be $1,685 a month – that’s a saving of $240 per month or $2,880 per year, just by shopping around.
Over the life of the two loans, the saving translates into a total financial cost of $433,649 for the cheaper loan, compared with $505,469 for the higher-rate loan. You could potentially cut your bill by $71,820 over the 25 years.