By: Harley Cheetham

Purchasing a home is an exciting time, whether you're a first time buyer or a home mover. But it can also be stressful, as there are numerous critical decisions to make, such as selecting the perfect home and finding the best mortgage. Receiving conflicting advice can make this process even more confusing. Below are some common mortgage myths that homebuyers need to know to make informed decisions.

“Get the biggest mortgage you can afford”

This advice is outdated from a time when property values were rising rapidly, and wages were increasing year-on-year. However, wages are not guaranteed to rise in line with inflation, and taking on a huge mortgage to afford a dream home is a real risk. Rather than taking on a massive mortgage, homebuyers should speak to a local mortgage advisor about realistic borrowing based on their personal circumstances.
 

“You can't get a 95% mortgage anymore”

Although it's more challenging than before, homebuyers can still get a mortgage of 95% through schemes like the Government's First Homes scheme or Help to Buy equity loan. These schemes mean that homebuyers can purchase a property at a discounted price, reducing the amount they need to borrow.
 

“The cheapest mortgage is the best option”

While cheaper monthly payments may seem attractive, homebuyers need to consider the bigger picture. A smaller monthly payment may be a tracker mortgage, which could shoot up quickly if the base rate rises. It's essential to consider fees, exit fees, and early repayment charges to make sure the mortgage fits the homebuyers' plan for the property.
 

“You can’t get a mortgage if you’re self-employed”

Self-employed homebuyers have access to the same mortgages as employed homebuyers, but proving their ability to make repayments on their mortgage could be more difficult. They'll need to produce an SA302 form for their earnings to be taken into account by the lender. It's best to seek the help of a mortgage broker with a specialism in that area to show you the full range of options available and provide advice on how to put in a squeaky-clean application.
 

“Your bank can give you the best mortgage”

While it may seem convenient to go straight to your bank, it's essential to assess the full market to find the most suitable mortgage. It's always a good idea to go with a mortgage broker who has a good knowledge of local markets and relationships with lenders to ensure you get the best deal.
 

“Bills, debt, and other outgoings won’t affect my mortgage application”

This is false. Any monthly outgoings will be considered in your application to assess mortgage affordability, including grocery bills, utility bills, debt repayments, car finance, or other general expenditures. Lenders will conduct a stress test on your finances in case of a change in circumstances.
 

“If you can’t save up for a deposit, get a personal loan instead”

Although it may seem like a quick fix, borrowing money with a personal loan could result in being turned down for a mortgage. Lenders will undoubtedly have concerns about whether the borrower can pay off both the loan and mortgage. Saving up for a deposit is time-consuming and challenging, but it's worth it to avoid potential issues down the line.