Mortgage Myths

TRUTH: You don’t actually apply for a mortgage until you’ve made an accepted bid on a home, but you should look for a mortgage before then and have a good idea of how much you’re likely to be able to borrow. A mortgage broker can help your scour the market for the lenders most likely to accept your application and even get a ‘decision in principle’,  an unofficial guideline of how much the mortgage provider could be willing to let you borrow.

TRUTH: Your parents can gift a deposit and help you get on the property ladder, but that’s not the only way your parents can help. If your parents are homeowners, they can act as a guarantor on your mortgage, meaning they would cover any repayments should you fail to meet them.  However it’s worth noting this could put their own property at risk, so be sure you can afford to meet repayments before applying.

TRUTH: Mortgages can work out cheaper than rent payments, depending on the type of home and prices in the area. It’s also worth noting that mortgage payments go towards you owning the home, whereas rent payments grant you the right to live in a property owned by someone else. The size of your mortgage repayments with largely depend on the amount you wish to borrow, and the term you wish to borrow it over.

TRUTH: You can get a mortgage with bad credit; it’s not impossible-just slightly harder. Mortgage brokers like Clever Mortgages have access to specialist lenders who consider more than just your credit history when making a mortgage decision.

TRUTH: You might be able to get a mortgage from your bank, but there are many lenders on the market, some of which might be able to offer better deals or rates so it’s often wise to look around before settling on a mortgage.

TRUTH: The interest rate will play a part in the calculation of your mortgage repayments, but a lower interest rate doesn’t necessarily mean you’re getting the best deal. If you have a tracker mortgage, the interest rates could be subject to rise and fall with the market, so what is a low interest rate now could potentially increase, and vice versa. Additionally, a fixed rate term will eventually end, at which point you’ll automatically be transferred onto your lenders standard variable rate (SVR) which could see your mortgage payments rise. It’s also worth looking at the fees and whether the mortgage product offers any additional features, like free survey or discounted fees. If you’re struggling, a mortgage advisor would be happy to help-just get in touch!

TRUTH: When it comes to taking out a mortgage, or any credit, affordability is key. If you have a regular income — whether through full-time, part-time, freelance, contract work and so forth — then as long as you can prove your ability to meet repayments there should be lenders that will consider you.

TRUTH: Many lenders are taking a far more flexible approach to borrowing and consider ages far higher than they may have done in the past. There is no maximum age for applying for a mortgage: some lenders do have their own minimum and maximum age limits, but as long as you have the regular income to pay the mortgage repayments over the full-term of the mortgage — and meet other affordability criteria — there are most likely mortgage options available to you.

TRUTH: There are many resources available to support first time buyers regardless of age, and some government schemes like Help to Buy and Lifetime ISA’s which can help with building a deposit. The misconception that young people can’t get on the property ladder or get a mortgage isn’t true-mortgage lenders will likely have a minimum age for lending but that is usually between 18-21.

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