Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Invest

The ‘common misconception’ that could add to your mortgage

By Lucy Dean · March 23 2018
Reading:
egg
egg
egg

Invest

The ‘common misconception’ that could add to your mortgage

By Lucy Dean
March 23 2018
Reading:
egg
egg
egg
common misconception

The ‘common misconception’ that could add to your mortgage

author image
By Lucy Dean · March 23 2018
Reading:
egg
egg
egg
common misconception

This financing arrangement is often considered a last resort, but according to a financial services CEO, avoiding it is not always a good idea either.

To the CEO at You’re Welcome Finance, David Lennon, the argument that taking out a personal loan should be a last resort for mortgage holders is simply a misconception.

Speaking to Nest Egg, he explained, “Lets say you want to spend $100,000 to do a renovation on your property, the absolute first thing to do is to go to your bank and see if you can get a refinance, or see if you can use the equity in your home.

“[However] if you're going for a smaller amount, $25,000 or $20,000, I'd strongly advise you not to put that on your mortgage. You may get a better interest rate but remember, your mortgages are written over 25-30 years. The great thing about a personal loan is you know it's going to get paid off in a short space of time.”

That’s provided that the borrower has a stable job and a solid credit file.

Advertisement
Advertisement

“Theres absolutely nothing wrong with taking out a personal loan if you're doing it for the right reasons,” Mr Lennon said.

“Id tell people to be careful how many inquiries for [finance] you're making because the more inquiries you take you're lowering your credit score and that's important. [Additionally], just make sure that you've got a bona fide lender.”

In his 15 years working in the personal loan space, Mr Lennon has seen inquiries for things as mundane as new furniture to life-altering surgeries, like gender reassignment operations.

“If you've got any product or service that's costing $7,000-$9,000 – that's a lot of money, not many people have that in cash sitting in the bank,” he said.

However, it is critical that potential borrowers use discretion when choosing a lender and loan type.

Payday lenders in particular have come under fire recently for dodgy contracts and sales tactics, Mr Lennon noted, while emphasising the distinction between personal and payday loans.

“I would just tell everybody, do your homework,” he said.

The ‘common misconception’ that could add to your mortgage
common misconception
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Nest Egg.

Read more

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.