Let’s face it: navigating the world of mortgages can be very confusing. And, according to a 2023 survey conducted by the Coventry Building Society, this is especially the case if you’re a first time buyer.
The survey found that 40% of all first time buyers they surveyed said they needed ‘more information and guidance’ about applying for a mortgage. While 36% required ‘more detail on exchange of contracts and associated costs’ such as legal fees, the deposit and stamp duty.
“Mortgages aren’t something you’re taught about during school,” mortgage adviser and director of Mortgage Confidence, Jo Jingree, says. “But with more than 20 years’ of experience under my belt, it’s a topic which I’m fluent in.”
Myth 1. You need to put down at least 20% — FICTION
A cost of living crisis, seemingly tougher lending criteria and sizeable deposit requirements can make it tricky for first time buyers to reach that bottom rung of the property ladder. But despite what you might have heard, you don’t need to save 20%.
Depending on you and your circumstances, some lenders may accept a 5%, 10% or 20% down payment. While other lenders don’t require you to put down a deposit at all.
This comes after 100% mortgages returned to the market in May 2023, after Skipton Building Society launched its new ‘Track Record’ mortgage which is specifically designed for first time buyers who are renting.
MYTH 2. An impartial mortgage broker has access to more mortgage deals — FACT
This one’s true. The many benefits of an impartial mortgage adviser are well documented. Yes, you might bank with a certain lender or perhaps you have always taken out your mortgage with a certain building society.
But impartial mortgage advisers work closely with a whole host of lenders and have access to mortgage deals which might not otherwise be available on the high street, as they aren’t restricted by being employed by any one lender.
MYTH 3. You have to have the perfect credit score to get a mortgage — FICTION
Have you missed some credit card payments? Been issued with a county court judgement? Or do you have little-to-no credit history? While these things can affect your credit score, they don’t necessarily stop those who are credit impaired from getting a mortgage full stop.
“So, no you don’t have to have the perfect credit score to get a mortgage,” Jo says. “But you should always try to avoid or minimise any blemishes on your credit history, because behaviour like the above can lower your credit score which in turn could impact how much you can borrow, how much of a deposit you’d have to put down and your interest rate” Jo adds.
MYTH 4. You can’t get a mortgage if you’re self-employed — FICTION
Getting a mortgage when you’re self-employed can be a longer, trickier and more paperwork-fuelled process. But it’s perfectly possible to be your own boss and secure a mortgage, considering you pass exactly the same ‘stress tests’ and checks as if you were PAYE.
As we mentioned in a previous blog about how to get a mortgage when you’re self-employed, doing so while working for yourself might just require you to jump through a few extra hoops.
MYTH 5. You can never pay your mortgage off early — FICTION
Of course, paying off your mortgage early isn’t doable for most of us. But if you have the funds to do so, you can absolutely pay your mortgage off early.
“Just know: you may be required to stump up an early repayment charge (ERC),” Jo says. “This amount will vary depending on the lender. To find this out, dig out your mortgage paperwork or get in touch with your lender.”
MYTH 6: You need to take out Buildings Insurance when you take out a mortgage — FACT
But wait, what is Buildings Insurance again?
Buildings Insurance covers the cost of repairing damage to the structure and permanent fixtures and fittings of your home. This includes your roof, walls and windows, as well as bathroom and kitchen fittings.
As a general rule of thumb, your Building Insurance should cover the full cost of rebuilding your home from the ground up should there be loss or damage caused by:
- Fire, explosion, storms, floods, earthquakes
- Theft, attempted theft and vandalism
- Frozen and burst pipes
- Fallen trees, lampposts, aerials or satellite dishes
- Vehicle or aircraft collisions
Put simply, it covers you for anything from a roof leak to totally rebuilding your home.
MYTH 7. You need to get a mortgage from your current bank — FICTION
“This is a query that comes up a lot,” Jo says. “But it’s absolutely not true.” As is the case for most things, shopping around could help you find a mortgage lender and deal more suited to you and your personal circumstances.”
Still got more questions?
Then get in touch with multi-award-winning Jo, who has been working in the industry since 2000. Jo offers a 30-minute no-obligation phone call so be sure to reach out.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £399.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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