Friends and family can be a valuable source of advice and information when taking out a mortgage. From sharing the name of a brilliant broker to words of wisdom gained from their own homebuying experiences.
But, as well meaning as some advice can be, sometimes it’s not always correct. For there are certain ‘myths’ which do the rounds when people mention they want to buy a home.
Emma Graham, business development director at Hodge Bank, said spreading this misinformation can mean many individuals miss out on better deals or opportunities.
“Mortgages are one of the biggest financial commitments people make” she said, “so it’s no surprise myths take hold and stick.
“However, these misconceptions can stop people from even looking at their options, which means they might not be getting the most out of the market.”
Here Graham runs through five of the biggest myths still misleading UK homeowners and explains why they are not always true…
Myth 1: ‘You need a chunky deposit’
Yes, a deposit has an important part to play in securing a mortgage, and the bigger the down payment, the better terms you can get on your deal.
BUT… there are products, Graham explained, which require a smaller percentage. Plus, some lenders will take a flexible view depending on your situation.
“While a deposit is important for any purchase or move,” she said, “believing you need to put down tens of thousands of pounds can hold people back unnecessarily, when there are options that make buying or moving more accessible.
“Lenders consider several elements when assessing a mortgage application, including credit score, missed payments and affordability.
“Getting advice from an adviser helps people understand their affordability and options, including how much deposit they need.”
Myth 2: ‘Switching mortgage deals early always comes with heavy penalties’
If you have a fixed-rate mortgage, many charge early repayment fees for those who move deals early or pay off their loan in full.
However, Graham said many homeowners believe changing your mortgage automatically means big fees and this can stop them looking at what’s out there.
“The truth is,” she explained, “while early repayment charges apply in certain cases, they don’t affect everyone and vary depending on the type of product and the stage of the mortgage.”
In fact, Graham said, in some cases the potential long-term savings from switching far outweigh any costs involved.
“This myth can prevent people from exploring their choices in the first place,” she said. “Getting advice from an adviser who will compare the market is the best way to secure a mortgage deal to match individual circumstances.”
Myth 3: ‘Self-employed people can’t get a mortgage’
Oh yes they can! Graham confirmed: “Lenders accept a wide range of income evidence, whether it’s tax returns, company accounts, or contracts.
“While it can take a little more paperwork, being self-employed doesn’t lock you out of the market, more lenders than ever are recognising the different ways people earn and manage their income today .
“Recognising the large number of self-employed people in today’s workforce, specialist lenders offer increasingly flexible lending criteria for those with income outside the ordinary.”
Myth 4: ‘You’re stuck with your lender once you sign’
“Some people think once they’ve chosen a lender, that’s it for the long haul,” said Graham, “but the mortgage market just doesn’t work that way. It’s a competitive space, and switching or remortgaging is a common part of homeownership.”
She said, the belief you are tied to one provider forever can lead to people missing out on opportunities to find a product that better suits their needs as their circumstances change.
Myth 5: ‘Older borrowers can’t get mortgages’
This, said Graham, is an outdated view. “Many lenders now consider applications from older customers,” she explained, “recognising that people are working later in life, living longer, and have very different financial needs compared to previous generations.
“Age alone is no longer the barrier it once was, but the myth continues to make people think their options are more limited than they really are.”
Graham concluded: “The mortgage market has changed, and these myths don’t reflect how flexible it really is today. Understanding what’s true and what isn’t, can make all the difference when it comes to making informed choices about your home and your finances.”
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
