Getting a mortgage can be a confusing and daunting process. What doesn’t help is that much of the common received wisdom is now out of date. The reality is, over the years, mortgage providers have evolved their services, and that means well intentioned advice from friends and family can often be misleading and incorrect.
“Because I have a history of bad credit, I will never get a mortgage.”
It’s true that a bad credit history is a barrier to getting a mortgage, especially with high street lenders. However, that doesn’t mean your homebuying dreams are dead in the water.
In fact, there are specialist lenders out there who offer mortgages specifically designed for people with a history of bad credit. They will take the time to understand your specific circumstances, without passing judgement. They will look at your current financial situation, and make a decision based on where you are now. Many people who have encountered adverse credit events in their lives have used these kinds of mortgages to get on the housing ladder. And as it happens, we can help you navigate this process.
We’ve spoken previously about how we can help you understand how mortgage lenders will view your credit history, and how you can put a bad credit history behind you here.
“Older people won’t be offered a mortgage.”
This isn’t true these days. Mortgage lenders have adapted their products to suit the changing way people work. Many lenders will now look at factors like retirement income when calculating your mortgage eligibility. And in practice this means that many mortgage products come with no maximum age limit.
At the end of the day, your age alone won’t disqualify you from a mortgage.
“If you’ve just started a new job, you need to wait before applying for a home loan.”
The way people work has changed over the years, and this has meant lenders have adapted their requirements. After all, we’ve long moved away from the era where people could expect to have a job-for-life, and mortgage providers recognise this.
Every lender is different, of course, but it isn’t out of the question that a mortgage application based on a short term of work, or even a contract for a job that hasn’t started, will be enough to secure your mortgage.
“You shouldn’t apply for a mortgage without having a house you want to buy.”
This isn’t necessarily wrong in itself, but the current competitive nature of the housing market means that early action can put you ahead when it counts.
Yes, it’s true that you can’t apply for a mortgage until you’ve had your offer on a property accepted. However, doing your research beforehand can help you establish the amount of money lenders would potentially offer you. Lenders will put this information in writing for you, in what is called a ‘mortgage in principle.’
Sometimes, as when several people put a similar offer in on a property at the same time, being able to brandish a mortgage in principle can give you the edge, and show the seller that you’re serious, and likely able to follow through on your offer.
“Fixed interest rates are always the best option.”
Simply not true. As with anything, it depends on your current situation, appetite for risk, and the amount of capital you have available. Fixed-rate mortgages give you certainty, but they often come with a higher interest rate than variable-rate alternatives. And if interest rates drop, you’ll be stuck paying the higher rate for the lifetime of the product.
Making the decision to choose a fixed rate over a variable rate depends on several factors, some of which will be out of your control to predict. At Evolve, we can help you decide whether fixed or variable interest rates would suit you best.
"The lower the interest rate, the better the mortgage.”
Now, don’t get us wrong, a lower interest rate is no bad thing. However, it isn’t the full story when it comes to choosing a mortgage product. And having your eye on just the interest rate may distract you from other, sneakier, costs.
For example, it’s important to be aware of how much the fees for accessing a mortgage come to. A product that costs, say, £995 to access and lasts for two years would mean you’re actually paying just over £40 a month extra. Which could potentially wipe out the perceived ‘bargain’ interest rate that attracted you to the mortgage in the first place.
Other factors, such as the length of the mortgage, and limits on how much you can overpay each year, might also mean you ultimately end up paying more money in the long run.
At Evolve FS, we take the time to sit down with you, and understand what you need from a mortgage. From there, our friendly experts will search the whole market, and find you the most suitable product. Contact us today for an informal discussion about your mortgage needs.