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Mortgages play a crucial role in the home buying process. However, there are several misconceptions in the market that can prevent potential buyers from getting a mortgage or lead them down the wrong path. Let us debunk five common mortgage myths in the UK to help you understand the property market more effectively.
One of the most persistent myths about mortgages is the belief that you need a substantial deposit to buy a new home. While a larger deposit can open the door to more mortgage options and potentially lower interest rates, it is not an absolute requirement. Here are a few other options you can explore:
Certain housing schemes allow you to get part ownership (25% to 75%) of your new home while you can keep paying rent for the remaining portion. You can also increase your ownership percentage gradually till you own the whole property.
Some mortgage products also allow you to pay as little as 5-10% as a deposit. Some lenders also allow for no deposit at all, providing you with a loan of the entire value of your house.
Through the part exchange scheme offered by a developer or a builder, the existing property owned by the buyer can be exchanged for a new property.
Another common misconception about getting mortgages is that you must have a perfect credit score. While a good credit history is undoubtedly beneficial, having a less-than-perfect credit score does not necessarily disqualify you. Many lenders offer mortgage products for people with a bad or no credit history. The terms and interest rates may differ, but it is surely possible to get a mortgage with different credit backgrounds.
When buying a new home from a developer, you may be told that you must use their recommended mortgage broker. This is a myth. You have the right to choose your broker and lender independently. While the developer may have preferred partners, you are not obligated to use them. Selecting a mortgage broker that best serves your interests often leads to better terms, lower fees, and a financially smart arrangement.
Some prospective home,buyers believe they can only use their own bank to obtain a mortgage. This is not accurate. You have the flexibility to use any bank or lending institution who will offer you the best terms based on your personal and financial profile. Using a whole of market independent mortgage broker can help you in ensuring you receive sound mortgage advice and the most favorable terms based on your individual requirements.
Another common misconception is that once you choose a mortgage, you’re locked into it for the entire term of 15-30 years. This is also not true. You have the flexibility to review and refinance your mortgage during its term. Remortgaging can be a strategic move to secure better terms, adjust your repayment schedule, or access equity in your home.
Clearing any misconceptions about mortgages can prove to be very profitable in the long run for you. If you still have any questions, you can reach out to our mortgage brokers at Visionary Finance to help you.