In the hopes of helping first-time buyers to better understand the mortgage process, the team of mortgage experts at onlinemortgageadvisor have pulled together a list of common house-buying-related myths, and explained why they’re not true.
It's impossible to get on the property ladder when you’re young
Many renters don’t even consider the prospect of buying a home before they’re 30 – it’s seen as an impossible dream that takes a huge amount of savings to make a reality. While you do need to have some savings, you don’t need a massive deposit – Government schemes such as Shared Ownership can make buying a home much more achievable. What’s more, some mortgage lenders are open to accepting a deposit of just 5%, making it much easier to save enough to get accepted.
You have to get a mortgage with your current bank
Simply sticking with your current bank when it comes to getting a mortgage could lead to you spending a lot more money in the long run. There are a wide range of different deals out there, so it’s important to shop around to find one that works best for your needs. If you’re not sure where to start, consider seeking advice from an experienced mortgage advisor – using their expert knowledge, they can do a lot of the work for you and find the best option.
You need to pay a large deposit
While having a large deposit saved up can make it easier to secure a mortgage, there are options out there for people who don’t have significant savings. One of the best examples of this is the Shared Ownership scheme, which allows you to buy a percentage of a home, and then rent the remaining portion from the property’s housing association. Over time, owners can buy more and more of the house, which is known as ‘staircasing’. This is a great compromise between buying and renting and typically offers more stability than just renting.
You need a perfect credit score
Having a good credit score, which would be 881 or higher if the consumer credit reference agency is Experian, can certainly help you to get accepted for a mortgage. That being said, if you’ve struggled with debt in the past and you’re worried that your score is too low, there are many mortgage lenders who offer deals for those with a lower credit score. What's more, they’re some lenders who don’t use credit scoring at all. It is important to be aware, however, that this usually means that your interest rates will be higher.
It’s impossible to get a mortgage if you’re self-employed
When it comes to meeting the income requirements for securing a mortgage, it can be more complicated for those who are self-employed, but that shouldn’t stop you if you’re looking to buy a home. All lenders are looking for is proof of earnings, to ensure that you can keep up with mortgage payments. So, look to have at least two years of accounts to prove that you have a good and regular income. However, some lenders will accept less than this.
You need to find a property before you apply for a mortgage
For most prospective buyers, finding their dream home comes first, and applying for a mortgage comes second. It can actually help to look at deals and speak to lenders and brokers first, though. The first benefit of this is that it can give you a better idea of your budget, as you’ll know straight away which mortgage deals you’re able to apply for.
Secondly, you can secure a decision in principle, which will speed up the process of buying the property. Decisions in principle only last for a set amount of time and are not a guarantee that you will be offered a mortgage by the lender, but they can help you to appear more attractive and trustworthy to sellers.
