3 Big Mistakes I Made With My First Mortgage


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Learning from my mistakes can help you avoid getting stuck with the wrong home loan.

Important points

  • When I mortgaged my first home, I didn’t know much about loans.
  • I did not look for different lenders.
  • I haven’t paid a large enough deposit either.

When I bought my first home I wasn’t very financially savvy and made some big mistakes when I got my mortgage loan. Unfortunately, these mistakes have made borrowing more expensive than it otherwise would have been.

Luckily I was able to make the necessary payments and ended up selling the house for more than I paid for it so it didn’t become the financial disaster it could have been. Still, the mistakes were unfortunate and hopefully other future borrowers can learn from the mistakes I made so they don’t cost themselves as much money as I did.

Here were three big mistakes I’ve made that others may be able to avoid in the future.

One of the biggest mistakes I made when I got my first mortgage was just going to the bank that my real estate agent recommended. Rather than soliciting multiple offers from different lenders, I simply contacted the lender I was referred to and accepted the mortgage loan I was offered.

By making this choice, I deprived myself of the ability to ensure I was getting the lowest possible price and charging reasonable fees. To this day I have no idea whether or not I overpaid for that loan or could have gotten a better interest rate – but I suspect I paid more interest than I should have given the interest compared to the national rate Average wasn’t very competitive back then and I was a pretty well qualified borrower.

2. Pay a small deposit

I really wanted to buy my first house because I hated renting. As a result, I immediately made a purchase even though I only had a 10% deposit. Because I invested less than 20%, I had to pay for private mortgage insurance. This increased my monthly expenses while protecting my lender and giving me no direct benefit.

I wasted money every month that I paid PMI, and the payments added up to several hundred dollars. I could have waited a few more months, saved a little more to pay a 20% down payment and saved myself this unnecessary expense.

Of course, that’s not to say that buying a house with less than a 20% discount is always a mistake. But in my case, my first home was very affordable relative to my income at the time, and I had very few expenses. It wouldn’t have taken much time to add extra savings, so I wouldn’t have missed out on real estate appreciation or much time building equity if I’d just been a little more patient.

3. Choosing an adjustable rate mortgage

Eventually, I chose an adjustable rate mortgage for my first loan because the interest rate was slightly lower than a fixed rate mortgage and I expected to move or refinance before the interest rate adjusted. While this was happening, it may not have been the case. I regret taking such a big risk and getting a loan with interest rates that could go up, rather than protecting myself by making sure I know what my total costs would be over time.

Luckily I know better now and have been smarter about follow-up mortgages. And hopefully others can learn from my mistakes and avoid similar mistakes when buying their own first home.

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