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 WTF.
In this guide, you’ll find:
You can’t get a mortgage with a bad credit rating
You can’t get a mortgage if you’re self-employed
You can only get a mortgage from your current bank
If you can’t borrow enough, you’ll need a big deposit
A lower interest rate will mean a cheaper mortgage
Shopping around could hurt your credit score
Young people can’t get on the property ladder
There’s no point looking into mortgages until you’ve found a property
Mortgage repayments cost more than rent
Your parents can only help out if they’re rich
A poor credit score can make it more difficult when you’re applying for a mortgage, but it doesn;t make it 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.
At Haysto, we work with specialist brokers and lenders who specialise in offering mortgages to people with bad credit. 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 really bad credit. So there’s still hope!
Whether or not you’ll be able to get a mortgage will depend upon the severity of your credit issues, as well as how recent they were. But just because you have bad credit issues, doesn’t mean you can’t get a mortgage.
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 have a complex income. If you don't have a standard 9-5 job with three month’s worth of payslips, lenders see you as a ‘complex’ case and sometimes just reject you because it’s not easy for them to work out. That’s obviously unfair.
But just because it can be more difficult to get a mortgage if you’re self-employed, it’s definitely not impossible. There’s loads of specialist lenders who’ll consider your application. At Haysto, we work specifically with specialist mortgage brokers and lenders to help people who are self-employed, have bad credit, or have complex situations that come from a complex income. So we know first-hand, it’s totally possible to get a mortgage if you’re self-employed, you just need to jump through a few extra hoops than those who can produce their three month’s worth of payslips.
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.
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 Help to Buy equity loan which allows you to borrow between 15% and 40% of the value of the property.
There’s also 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.
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 is 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.
The agreed length of your mortgage will also have an impact on the amount that you pay each month and you’ll also have fees to pay, which can be as much as £1,000 overall. Other things like how much your property is worth and if you’re choosing to overpay also affect how much you’ll pay for a mortgage.
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 if you make multiple enquiries within a short period of time, don’t worry, it won’t affect your score. Lenders understand you’re only going to commit to one mortgage, so multiple enquires are counted as one.
Getting onto the property ladder can seem impossible, especially now. But there are more options than people realise that can make it possible.
Saving a deposit big enough is one of the biggest barriers for young people who want to get on the property ladder. But it’s possible to get a mortgage even if you can’t save a lot of money There’s schemes like the Help to Buy and shared ownership. 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.
Speak to a specialist mortgage broker who can let you know all your options if you’re feeling like it’s impossible.
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 a mortgage broker who can advise you on your options. You can get a ‘mortgage in principle’ from lenders, which is a document from a lender that states that ‘in principle’ they would be happy to lend you the money. A ‘mortgage in principle’ or ‘decision in principle’ can make it easier to get an offer accepted on a property when you do see something you want.
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.
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, they could act as a guarantor on a a guarantor mortgage, which means that if you were unable to make any payments, they agree to pay it for you. This is obviously a big financial commitment from them, but it could help boost your chances of getting a mortgage.
Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.
Applying for a mortgage or understanding your options shouldn't be confusing, yet there are just so many myths doing the rounds and it's not easy to know where to turn to get the right advice.
Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.