First-time house buyers are in the most crucial position among all interested home buyers. Since they have no first-hand experience and potentially little knowledge about buying a home, they tend to rely primarily on what other people say, whether through the articles they read or the stories they hear. While it is good to explore and try to understand concepts and setups on your own, it could also be the same reason you end up with many misconceptions about home buying.
Before you get confused with what is correct or not, let us clear some of the misinformation right now, particularly about getting a home buyer’s loan. Below are some of the most common false conceptions about mortgages in the UK and the truth behind them.
Myth 1: A Low Credit Score Means No Mortgage for You
An individuals credit score is one determinant of whether people would get their mortgage applications approved or not, and for so long, people have believed that a low credit score means no approval at all. While it does affect the mortgage rate that one would get, having a low credit score does not mean a person can no longer afford to buy a house.
Borrowing money could be difficult for them, but it is not entirely impossible. There are still lenders who can provide mortgage products for people who have low credit scores. Homebuyers would be well served in using a mortgage broker who has good experience in this area.
Myth 2: You Only Need to Apply for a Mortgage Once You Have a Property to Purchase
Applying for a mortgage loan can be a long process. For this reason, people think that one should only process an application once the seller accepts their proposal. However, the mentioned excuse is also why it is crucial to process it early on. If you want to secure the property right away, it is best to have your mortgage pre-approved before house shopping.
Moreover, doing that step also helps home buyers know how much they can afford. Keep in mind that different lenders offer loan amounts on a case-to-case basis. It is always the safest route to know your budget first before looking into potential homes.
Myth 3: No Deposit Means No Property Purchase
Back in the day, anyone who wanted to buy a house needed to have enough savings to pay for their home deposit. That has been the standard for years. However, times are changing, and the processes are adapting to the new needs of people. Not all can afford to produce a 5 to 20 per cent deposit for their homes.
If this is the case for you, you only need to look for more mortgage options as some offer one hundred per cent mortgages as an alternative. They are rare offers, though, and also come with significant risks for the applicant to consider.
Myth 4: Always Grab the Low Interest Rate Loan
A low interest rate loan obviously means a monthly payment that is more affordable to the home buyer. However, just because the interest rate offered is low, does not make it a better offer for your circumstances. The interest rate is only one of the factors that would affect the overall cost of your home purchase. To know if you are making a good decision, you need to look at the bigger picture.
You might be paying a low monthly fee, but how long would you need to pay your mortgage? Is it a fixed-rate mortgage, or will it change eventually? What about the other mortgage costs you need to pay? How much in total would you spend on your house? Keep all these considerations in mind before agreeing to a specific mortgage product.
What makes first-time home buying confusing is the people’s lack of familiarity with the processes and rules or the language that the lenders and mortgage brokers use. Unfortunately, many myths still exist that could be true before but are entirely different now. The good news is that there are always advisers who can guide you towards the right path, making everything more manageable for you the home buyer.
If you need help navigating the confusing world of mortgage and home buying, get in touch with A Move Brokers. We will serve as your dedicated guide and mortgage advisor in Chester. We help make first-time homebuyer loan applications as simple and as stress-free as possible. Contact us at 01244 478780 to learn more about our service.
As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.