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Many first-time buyers are often put off when it comes to applying for mortgages since they think they won’t qualify for one, or they do not know where to look to find the best deals. If you are nervous about the thought of applying for a mortgage, here are 8 of the most common myths about mortgages that may be putting a hold on your application.
1.) Your Bank Is the Best Place to Apply for A Mortgage
Today there are so many mortgage deals on offer, which is why it is very important to compare mortgages from various lenders to find a deal that matches your needs. If you need assistance when it comes to choosing the right mortgage, a reliable broker can help you compare the different deals and explain which ones might suit you best. You might want to check this mortgage brokers Huddersfield for more info.
2.) You Should First Find a Home You Are Interested in Buying Before Looking for A Mortgage?
If you are interested in buying, you should look for a mortgage first. This will give you a clearer idea of what type of mortgage you will be able to secure and how much it is going to cost you. You should apply to one of the lenders of your choice for what is known as a “decision in principle” before you start searching for properties. This will indicate how much the lender is prepared to lend “in principle”, although this isn’t a guarantee that they will offer the mortgage until you have progressed through the entire application process.Â
3.) You Won’t Be Able to Secure a Mortgage If You Are Self-Employed
Many people all over the UK are self-employed, and working for yourself will not disqualify you from securing a mortgage. Providing your “proof of earnings” might be more challenging, but once you can demonstrate you have a consistent income and you will be able to make the repayments, you should pass the affordability checks.
4.) You Won’t Be Able to Get a Mortgage Without a Large Deposit
If you don’t have a large deposit saved, there are many lenders that provide 95% mortgages that will only require you to put a deposit down of 5% (of the property’s value). You can also take advantage of Government schemes that assist people with small deposits like the Help to Buy equity loan.
5.) You Will Only Get a Mortgage with A Perfect Credit Rating
There is no denying that a good credit rating increases the likelihood of securing a mortgage, but for those that have made a few mistakes with managing their debts in previous years, this doesn’t automatically mean that their applications will be refused. There are some lenders that specialize in mortgages for people that have a low credit rating, although the interest rates are usually higher.
6.) It Is Cheaper to Rent Rather Than to Buy
A mortgage may appear to be a significant financial commitment, but assuming that renting a home is cheaper is inaccurate. In 2021, Halifax carried out research that discovered that owning a home is cheaper than renting, with the average cost of owning a property being £1,378 cheaper when compared to renting.
7.) You Won’t Be Able To Secure A Mortgage On A “Non-Standard” Property
If you are interested in buying a flat in one of those high-rise blocks or a property situated above a restaurant or shop, you may be under the impression that a mortgage won’t be possible. However, there are lenders that will consider providing a mortgage in tall buildings or above commercial premises.
8.) My Parents Cannot Help Me Secure a Mortgage Because They Have Run Out of Savings
Many first-time buyers will turn to their parents to help them secure their first home, but when your parents are not able to help towards your deposit, there are other ways that they may be able to help. One of these examples is that a few lenders may allow a parent to use their home as collateral which would allow their child to secure a mortgage.
