When it comes to a mortgage or taking out a loan, there are plenty of myths about what is true or untrue about the process. Here are some common myths people mistake for facts when looking into mortgages and taking on a mortgage broker.
1. You can’t get a mortgage with bad credit.
Credit can affect a mortgage for different reasons. While a bad credit rating can make the process of applying for a mortgage more difficult, it does not make it impossible. It would all depend on how bad your credit issues are and how recent the issues took place. However, this does not mean there is no possible way you can’t get a mortgage. Talk with a mortgage professional to understand your options with bad credit.
2. You cannot get a mortgage if you are self-employed.
Like having bad credit, being self-employed can make it a little more difficult to get a mortgage. However, it is still not impossible! A lot of mortgage lenders do not have experience dealing with people who have a complex income rather than a standard nine to five with a steady paycheck. This process might just take a little longer. There are still many mortgage brokers like Dee Ayers who will work with you and who are well versed in this circumstance.
3. You can only get a mortgage from your bank.
Many people think it is only possible to get a mortgage from the bank you are currently banking with. However, that is not true. You can choose to get a mortgage with whichever bank is offering the best rates for you. Your current bank could have some deals for existing customers, but that does not mean you are required to work with them.
4. If you can’t borrow enough, you'll need a big deposit.
Depending on how much you are able to borrow, you might be limited. If the property is a little out of your budget, you can consider putting down a larger deposit, but that is not necessary. If necessary, you can borrow between 15% to 40% of the value of the property.
5. Lower interest rates mean cheaper mortgages.
Who doesn’t love a lower interest rate? However, there are many other factors that go into your monthly payments and the total overall expenses for your mortgage. A tracker mortgage can rise at any time which is why most people opt for a fixed-rate mortgage. The length of your mortgage will also affect the amount you are paying each month along with how much the property is worth.
6. Shopping around hurts your credit score.
This is a very common myth. People often believe this myth because every time you take out a mortgage application it is noted on your credit report. However, if it is noted you are looking at multiple different inquiries within a short period of time it will not affect your score because lenders understand you are trying to find the right mortgage for you.
7. Young people can’t climb the property ladder.
In order to start the climb up the property ladder, saving money for a deposit big enough for a home is one of the hardest parts. There are options for guarantor mortgages which can have a guardian or friend help pay your mortgage if you cannot. There are ways to make this work, it is not impossible!
8. There is no point in looking into mortgages until you have found a property.
You do not need to apply for a mortgage until you are ready to buy a house, however, it does not hurt to browse different mortgages to see what you can afford. If you are thinking about buying a home, you can speak to a mortgage broker about your options, but you do not have to have already found a property.
9. Mortgage repayments cost more than rent.
Mortgage repayments are often cheaper than your rent. However, that can obviously depend on how much your rent was and how much the property is worth. Landlords normally charge more than their mortgage repayments in order to make a profit. Therefore, people find when they are paying a mortgage versus renting it is cheaper. Paying a mortgage is adding equity to the home and renting just goes straight to your landlord.
10. Parents can only help pay your mortgage if they are rich.
A mortgage can be a lot of money, and parents may not be able to afford to help you. However, parents can be a guarantor for the mortgage which makes them agree to pay the mortgage for you if you cannot. This is a huge financial commitment, but it could help boost your chances of getting a mortgage if you are worried you cannot afford it.
How We Can Help!
At Dee Ayers Mortgage, we want to help you find the best mortgage for your situation! We are here to help guide you through this process, making it easy and stress-free. Contact us today to get started.