Demystifying Mortgage Myths: Separating Fact from Fiction
Getting a mortgage can often feel like navigating a complex labyrinth, especially for first-time buyers. The unfamiliar terminology and intricate processes can easily overwhelm anyone. With so much information out there, it's crucial to debunk some common misconceptions that tend to muddy the waters. Let's shed light on these myths and provide some clarity:
Myth: You can't get a mortgage with a bad credit rating.
Reality: While a poor credit score can make it more challenging, it's not impossible to secure a mortgage. Specialist brokers and lenders cater to individuals with bad credit. They offer tailored mortgage solutions designed to help you step onto the property ladder, regardless of your credit history.
Myth: You can't get a mortgage if you're self-employed.
Reality: Being self-employed adds complexity, but it doesn't mean you're disqualified. Specialist lenders understand the intricacies of self-employed income and are willing to consider your application.
Myth: You can only get a mortgage from your current bank.
Reality: This is simply untrue. While your current bank might offer preferential rates, you are not obligated to take out a mortgage with them. It's essential to explore the wider market to find the best mortgage rates and deals available from different lenders.
Myth: If you can't borrow enough, you'll need a big deposit.
Reality: While a larger deposit can help bridge the borrowing gap, it's not the only solution. Government schemes like Help to Buy equity loans or shared ownership can provide alternative options, allowing you to secure a mortgage with a smaller deposit. These schemes aim to make homeownership more accessible and affordable.
Myth: A lower interest rate means a cheaper mortgage.
Reality: While a lower interest rate is desirable, it's not the sole factor determining your overall mortgage expenses. Monthly mortgage repayments depend on various factors, including the mortgage type (e.g., tracker or fixed-rate), the mortgage term, associated fees, property value, and any voluntary overpayments you make. Consider the full picture when assessing the cost of a mortgage.
Myth: Shopping around hurts your credit score.
Reality: Contrary to popular belief, shopping around for a mortgage won't harm your credit score. Multiple mortgage enquiries made within a short period are typically treated as a single enquiry by lenders. They understand that you're exploring your options and will only commit to one mortgage.
Myth: Young people can't get on the property ladder.
Reality: Although it may seem daunting, there are options available for young individuals aspiring to become homeowners. Saving for a deposit can be challenging, but government schemes like Help to Buy and shared ownership help make homeownership more achievable. Guarantor mortgages, where a parent, close friend, or family member agrees to assist with repayments if needed, can also be a viable solution.
Myth: There's no point looking into mortgages until you've found a property.
Reality: While you don't need to apply for a mortgage until you're ready to buy, it's beneficial to explore your mortgage options in advance. Speaking with a mortgage broker and obtaining a 'mortgage in principle' can provide insight into your borrowing capacity and make the offer process smoother once you find a property you desire.
Myth: Mortgage repayments cost more than rent.
Reality: In many cases, mortgage repayments work out to be cheaper than rent. Landlords often charge more than their mortgage repayments to generate a profit. With mortgage repayments, each payment contributes
By dispelling these mortgage myths, we aim to empower potential buyers with accurate information and pave the way for a smoother and more informed home buying journey. Remember to consult with professionals and explore various options to make confident and well-informed decisions about your mortgage.
