When the time is right for you to buy your first home, the chances are you’ll need a mortgage.
Many myths abound, from when you should first apply to who you can approach to whether you will even be considered. Here, we aim to dispel some of those myths for you.
1. You can only apply for a mortgage if you’ve already found somewhere to buy
You can wait until then if you like, but you risk losing your dream home if you do. Instead, apply as soon as possible for an agreement in principle (AIP). The lender will conduct an initial check and give an indication of the amount they would be prepared to lend. It’s not a guarantee they’ll give you a mortgage, but it does boost your credibility with sellers and estate agents when offers are considered.
Even before you do that, however, you should make sure you have an understanding of how mortgages work and consider speaking to an independent advisor about your options.
2. If it’s your first mortgage, only your own bank will consider you
You can apply to any lender if you want a mortgage, not least because your bank might not have the best deals available. It’s a good idea to take advice from an independent mortgage advisor with access to a wider range of lenders and mortgage products. They are free from affiliations, have great contacts and can often access deals not available on the high street.
3. You need the biggest possible deposit
A mortgage might be cheaper if you have a substantial deposit, but it’s not an essential element of getting a mortgage. 10% is standard, 5% is not unheard of, and even zero deposit mortgages are available.
If your family don’t have cash to hand over but want to help, there are ways they can contribute – for example, if there is equity in their property it can be leveraged in lieu of a deposit on the place you want to buy.
4. You won’t get a mortgage if your credit score is less than perfect
You don’t need a perfect credit score to get a mortgage. Depending on what your rating is, a mortgage might cost you more or you might be required to put down a bigger deposit, but it is unlikely to completely rule you out.
5. The best mortgage is the one with the lowest interest rate
It’s not necessarily as straightforward as that. There are a number of things to take into account when it comes to the overall cost of a mortgage, including fees, whether it’s a variable rate or tracker mortgage, and how long the reduced rate lasts for if it’s a fixed rate or discount mortgage.
When it comes to finding a mortgage, you have to look at the big picture, and that’s why talking to an independent financial advisor or mortgage broker is such a good idea. Because they know the market and understand the nuances of mortgage deals, they can save you a lot of stress – and money.