Mortgages can be an overwhelming concept to get your head around. Understanding the terminology, interest rates, deposits, types of mortgages, and credit rating can be difficult to understand, add to that the differing opinions you obtain when speaking to friends and family.
Speaking to your peers for support, although helpful, can be where many myths and mistruths are conjured, which in turn makes the whole mortgage process confusing. So, we thought it would be helpful to debunk the top 10 myths we hear so very often at TaylorMade, for you to make the best and most informed decision.
Myth 1 – Your Age Affects Your Ability to Get onto the Property Ladder.
Truth – Getting onto the property ladder can feel like the biggest hurdle of all, with the concept of saving a big enough deposit, especially for young people, seemingly impossible. However, schemes like Help to Buy and
Shared Ownership, including guarantor mortgages can help young people who haven’t saved a massive amount of money.
Myth 2 – It’s Cheaper to Rent.
Truth – There are factors that come into this such as location and property value, but mortgage repayments often work out cheaper than rent. In order for landlords to make money on their properties, they likely charge more than their monthly mortgage cost. Also, when you pay your mortgage repayments each month, you are adding equity to your home.
Myth 3 – Those Who Are Self-Employed Can’t Get a Mortgage.
Truth – The complexity of a self-employed income can make getting a mortgage more difficult, but it’s not impossible. This is because your income is not guaranteed each month and unless you have 3 months’ worth of payslips as evidence of your earnings, some lenders won’t trust that you're able to pay them back. There are, however, specialist mortgage brokers who deal specifically with
self-employed individuals.
Myth 4 – The Lower the Interest Rate, The Cheaper the Mortgage.
Truth – There are many factors that play into your monthly mortgage repayments, not just the interest rate. While the interest rate of your mortgage will certainly play a factor, the agreed length of your mortgage can affect how you pay, also how much your property is worth, and if you’re choosing to overpay.
Myth 5 – Those with Bad Credit Ratings Can’t Get a Mortgage.
Truth – Agreed, it can be more difficult with a bad credit rating to get a mortgage, but it is certainly not impossible. Specialist
bad credit mortgage brokers have access to bad credit mortgages specifically designed to get you onto the property ladder.
Myth 6 – Big Deposits are Needed for Those That Can’t Borrow Enough.
Truth – If you are purchasing on your own or your preferred property is a little out of your budget, a bigger deposit will certainly help. However, if this is not possible then there are government schemes such as the Help to Buy Equity Loan which allows you to borrow between 15% and 40% of the value of the property. There is also the Shared Ownership scheme which allows you to buy a smaller share of the property while paying rent on the rest.
Myth 7 – Your Credit Score is Affected by Shopping Around.
Truth – Every time you make a mortgage application it is noted on your credit score, this is true, however, if you are making multiple enquiries in a short space of time, then lenders will understand that you are only going to commit to one, therefore multiple enquiries are only counted as one.
Myth 8 – You Need to Find a Property Before Applying for a Mortgage.
Truth – In a lot of cases, having a
mortgage in principle from a lender can make it easier to get an offer accepted on a property, especially if there is a lot of interest and no upward chain. The mortgage in principle is a document that states what the lender would be happy to lend you.
Myth 9 – Only Wealthy Parents Can Help Out with Your Mortgage.
Truth – Money is not the only way your parents can help you out with a
mortgage. They can act as a guarantor which means that if, for some reason, you are unable to make any payments, they agree to pay for you.
Myth 10 – Your Current Bank Can be the Only Provider of Your Mortgage
Truth – You should shop around and get a mortgage from whoever offers you the best rates. Your bank may well offer just that but there is no obligation for you to take a mortgage with them.
Get a Clearer View of What Really Matters when Applying for a Mortgage
Many factors are important depending on your lender but there are factors across the board that will help you when you embark on the mortgage application process, such as:
- Ensuring your credit score is as high as it can be.
- Work out your budget to ensure you can afford to take on the property you desire.
- Job stability is an important factor for lenders, so if you are considering a change in profession, it would be wise to wait until your mortgage is secured.
- Reduce your existing debts where possible.
- Gather your proof of income including your P60, recent bank statements, and payslips.
- Save as much as possible for a deposit to help you secure the best rates possible.
- Consider an independent mortgage broker, like TaylorMade to guide you through the process
Discuss Your Options with a Trusted Mortgage Advisor in Manchester
For safety and security during the mortgage process, it’s highly recommended to utilise the services of a mortgage advisor. At TaylorMade, we offer friendly, professional advice for all kinds of mortgage situations and can provide a clear view of what your options are compared to what is available on the market today.
TaylorMade are your number one
mortgage broker in Manchester, also operating all over the UK.
Contact us today to see how we can help you.
