10 Mortgage Myths

Here’s 10 of the most common mortgage-related myths. Hopefully it’ll help you get the truth on a few things and make you feel less confused. 

In this guide, you’ll find:

1. You can’t get a mortgage with a bad credit rating

2. You can’t get a mortgage if you’re self-employed

3. You can only get a mortgage from your current bank

4. If you can’t borrow enough, you’ll need a big deposit

5. A lower interest rate will mean a cheaper mortgage

6. Shopping around could hurt your credit score

7. Young people can’t get on the property ladder

8. There’s no point looking into mortgages until you’ve found a property

9. Mortgage repayments cost more than rent

10. Your parents can only help out if they’re rich

1. You can’t get a mortgage with a bad credit rating

Bad credit can make it more difficult when you’re applying for a mortgage, but it’s not impossible. Even if you’ve been told there’s absolutely no way on earth you’re going to be able to get a mortgage, it could still be possible. 

It really depends on the type of credit issue registered on your Credit Report, when it happened and how much it was for. The mortgage lender you choose to apply with could also make all the difference. You’ll stand a far better chance applying with a lender who looks beyond computerised checklists and judges each applicant on a case-by-case basis.

At Haysto, our team of experienced Mortgage Experts work with specialist bad credit mortgage lenders. They’ve seen it all, and aren’t judgemental. And they have mortgages specifically designed to help you get onto the property ladder, even if you’ve got a really low credit score. So there’s still hope! 

Having bad credit, doesn’t always mean you can’t get a mortgage.

2. You can’t get a mortgage if you’re self-employed

Being self-employed can make getting a mortgage more difficult because a lot of mortgage lenders just don’t have the experience of dealing with people who’s income can vary from one year to the next. If you don't have a standard 9-5 job with three month’s worth of payslips, some lenders see you as a ‘complex’ case and could reject you because it doesn’t fit their lending criteria. That’s obviously unfair. 

The reality is there’s lots of specialist lenders who’ll consider your application, with sufficient proof of income. At Haysto, we work closely with mortgage lenders who look more favourably on people who are self-employed or have a more varied income. So we know first-hand, it’s totally possible to get a mortgage if you’re self-employed, you just might need to jump through a few extra hoops, particularly if you’ve only recently started working for yourself. 

3. You can only get a mortgage from your current bank

Not true. You should get a mortgage with whoever is offering the best mortgage rates. Your current bank might offer preferential rates and deals to their existing customers, but there’s absolutely no obligation to take a mortgage out with them. This is definitely where a mortgage broker - like us! - can save you a lot of time and, potentially, some money too.

Our mortgage team will be able to scour the whole market and let you know which mortgage lenders are offering the most suitable terms for your circumstances. You don’t need to got it alone and you certainly don’t have to accept the rates available from your existing bank or building society.

4. If you can’t borrow enough, you’ll need a big deposit

If you’re limited in how much you can borrow, perhaps because you’re buying on your own, or maybe just because the property you want is a little bit out of your budget, then you can consider putting down a bigger deposit.

But if that isn’t possible, there are government schemes that could help you get your mortgage without the need for a bigger deposit. For example, the shared ownership scheme, which allows you to buy a smaller share of the property while paying rent on the rest, meaning that you’ll need a smaller deposit.

If you have support from your family, there’s also several mortgage lenders that will accept gifted deposits.

5. A lower interest rate will mean a cheaper mortgage

Everyone would prefer a lower interest rate. But there are many factors that go into your monthly mortgage repayments, and therefore how expensive your mortgage could be overall. 

For example, if you’re on a tracker mortgage, this could rise at any time, which is why many opt for a fixed-rate mortgage, so you’ll know the repayments will remain unchanged for a set period of time. A tracker mortgage might have lower repayments to begin with but could potentially end up being higher before the term of the interest rate deal ends.

The agreed length of your mortgage will also have an impact on the amount that you pay each month. A shorter term loan will have higher repayments but you’ll pay back less interest than for a longer term loan. You could also have higher fees to pay, which can be as much as £1,000-£1,500 overall, if you opt for a cheaper rate deal.

6. Shopping around could hurt your credit score

One common myth is that shopping around for a mortgage can have a negative effect on your credit score. This myth comes from the fact that every time you make a mortgage application,  it’s noted on your Credit Report.

But, shopping around for the best interest rates doesn't necessarily involve submitting multiple applications with each lender offering an attractive rate deal.

With Haysto, you’ll get a true Decision-In-Principle - one you can trust. Once you know how much you can borrow, our Mortgage Experts can do all the searching for you. Just make an enquiry and we’ll get the process started.

7. Young people can’t get on the property ladder

Getting onto the property ladder can seem impossible if you’re a first-time buyer. But there are more options available than people realise that can make it possible. 

Saving enough deposit is one of the biggest barriers for young people who want to become homeowners. But it’s possible to get a mortgage even if you can’t save a lot of money. There’s schemes like shared ownership that have proved to be very popular among first-time buyers. There’s also the option of getting a guarantor mortgage where a parent or close friend or family member can agree to pay your mortgage if you can’t. 

8. There’s no point looking into mortgages until you’ve found a property

Technically, you don’t need to apply for a mortgage until you’re ready to buy a house. But it’s a good idea to have a look around at some different options to get an idea of what you’re going to be able to afford.

If you’re thinking about buying a home, speak to one of our mortgage brokers who can advise you on your options. They can arrange for you to get a ‘decision in principle’ from a lender, which is a document that states ‘in principle’ they would be happy to lend you a certain amount of money.

Already having a ‘decision in principle’ can make it easier to get an offer accepted on a property when you do see something you want.

9. Mortgage repayments cost more than rent

Mortgage repayments often work out cheaper than rent. It obviously depends on how much your rent was, where you live and how much your property is worth. But landlords generally charge more than their mortgage repayments in order to make a bit of profit, so often people find that when they move onto a mortgage from renting it works out cheaper. 

When you’re paying mortgage repayments, each payment is adding to your equity in the home, unlike rent, which goes straight to your landlord.

10. Your parents can only help out if they’re rich

A lot of parents can’t afford to give their children loads of money for a mortgage deposit. Even though they’d like to. But it doesn’t mean they can’t help in other ways.

For example, you could apply for a joint mortgage sole proprietor mortgage with one of your parents. With this type of mortgage, all applicants are jointly responsible for the repayments but only one is the outright owner of the property (you!) This is obviously a big financial commitment from them, but it could help boost your chances of getting a mortgage.