Myths and Facts: Mortgages Explained
Buying a property is a huge step in anyone’s life – whether you are a first time buyer or you are a seasoned professional developer, there remain many pitfalls of obtaining a mortgage.
Our team of experts have listed some of the main myths and facts around obtaining a mortgage – we hope you find this information useful.
Myth 1 – You don’t need to think about mortgages until you have found your ideal property
Fact 1 – You don’t need have the specifics in place but scoping out the various mortgage packages is a good thing – many providers will offer an agreement in principle so you can match the package to your budget and take your time to select the right property for you.
Myth 2 – You will always need a deposit to buy a property
Fact 2 – It is true that you will normally need a deposit of atleast 5% to buy a property but in recent years some providers have launched 100% mortgages – there are not a great deal of 100% packages but you need a family member or parent to guarantee the property with their own property or guarantee the loan.
Myth 3 – If your parents opt to help they will need spare cash to guarantee a 100% mortgage
Fact 3 – If they own their own home, they can as guarantors on your mortgage meaning that they will have to cover the shortfall if the property is repossessed and sold by the lender. Whilst it will boost your chances your parents would have to secure a charge against their own home.
Myth 4 – You will be able to get a mortgage if your rent costs more than a mortgage would
Fact 4 – Whilst repayments may be cheaper than your monthly rent this does not mean that you’ll get automatically accepted by a lender. Before a decision the lender will assess your income and outgoing in detail to ensure you can afford the repayments should rates rise,
Myth 5 – You cannot borrow enough to get a mortgage so will need a bigger deposit?
Fact 5 – Buying your first home is a major obstacle and once you own your first home buying a second or moving onwards is easier. For many the major problem is getting the deposit together – there are a range of government schemes and help to buy programmes that can assist as well as shared ownership and keyworker mortgage packages.
Myth 6 – You cannot get a mortgage if you have a low credit rating
Fact 6 – Getting a mortgage can be tricky with a low credit rating but with many people facing financial difficulties in recent years, there are now a number of lenders that can assist with a package designed for those with poor credit ratings.
Myth 7 – You can only get a mortgage from your current bank
Fact 7 – With more than 80 mortgage providers there are plenty of options – whilst it may be easy to stay with your bank there may be more competitive providers out there, we advise to shop around til you find what suits you and your budget.
Myth 8 – Budget is the most important consideration
Fact 8 – Whilst it may be tempting to go straight for the cheapest option there are other very important considerations to consider including the type of deal (interest rate / tracker deal), the mortgage period and package fees. We definitely advise taking expert advice to get the best deal for you!