Borrow like a pro

Mortgage adviser Mike Columbus offers four tips on how to avoid amateur mistakes with your home loan.

Do you want to be a mortgage amateur or a mortgage professional?

The difference will be stark. One (the amateur) will be stuck with a mortgage for their entire working life and pay hundreds of thousands of dollars more in mortgage interest then they needed to.

The other will successfully manage their debt, avoid a lot of interest cost and be freehold a long time before retirement. So how do you avoid the amateur league?

1. Be proactive. Realise that your default mortgage option is unlikely to be a good one. Speak to several providers and start viewing the various options and structures.

2. Ask questions. Ask questions to improve your understanding of your options. Determine the differences between various scenarios, such as whether to borrow more or less, and whether to make extra repayments or not. The greater your understanding of a mortgage the better your odds are of managing it well.

3. Review performance. Once you have committed to a mortgage plan be aware it will need regular reviews and will probably be changed or adapted at times. Make this a regular habit to ensure it is done.

4. Stick to a schedule. A plan of action could be making extra repayments or limiting your total monthly spending to a certain amount. There will be many opportunities to derail this plan, but a mortgage professional will do their utmost to stick to it and, if they do go off track, they get right back on.