How many of these mortgage myths do you believe?

Since buying a house isn’t something we do every day, most of us don’t know how it all works. It’s natural, then, that we cling to all the wisdom we can get from people who’ve been through it before.

The thing is, a lot of that well-intended information is inaccurate, misguided and just flat-out wrong.

So, whether you’re a first-time buyer or you’re going through the mortgage process again and can’t remember how it plays out, see how many of these mortgage myths you believe and discover the truth behind them.

‘I should find a house before I find a mortgage’

House hunting before you have a mortgage sorted is essentially putting the cart before the horse. If you do find your dream home, there’s a good chance your offer won’t be accepted unless you have a Decision in Principle from a lender. This says that, in principle, they will lend you enough money to purchase the property.

IT’S BEST TO SEE HOW MUCH YOU CAN AFFORD TO BORROW FIRST AND THEN START LOOKING AT PROPERTIES IN YOUR PRICE RANGE.

It’s best to see how much you can afford to borrow first and then start looking at properties in your price range.With Mojo Mortgages you can find out in as little as 15 minutes.

‘Interest rates are the only deciding comparison factor’

Interest rates are crucial to work out what you’ll pay back on your mortgage. A fixed rate of 3.8% might seem more expensive than a 3.6% equivalent, but you have to factor in the length of the contract, and other costs (such as product fees and valuation fees) that affect the amount you’ll pay.

A higher-rate mortgage deal with no fees attached, for example, might mean you pay less over the initial, fixed period.

‘The bigger the deposit, the better the rate”

Your Loan to Value (LTV) ratio has a big impact on the mortgage deals you can get, but weirdly, a lower LTV doesn’t always mean better rates.

LTV is the amount you borrow versus the value of the property. If you had a £20,000 deposit and had your heart set on a property worth £200,000, your savings would be worth 10% of it. You’d then borrow the remaining 90% - giving you an LTV of 90%.

In some cases, a smaller LTV can actually lead to slightly higher monthly mortgage repayments.

However, it is still a good rule of thumb to say that a bigger deposit will give you lower monthly repayments.

‘My credit rating isn’t perfect – I’ll never be able to get a mortgage’

Higher credit scores definitely help you to get a mortgage at a good rate, but a less-than-perfect score doesn’t rule you out entirely.

Lenders look at much more than your credit score when they assess your application, considering instead your overall financial situation – so don’t be put off.

‘Renting is cheaper than buying a home’

This might be true in the short term because your monthly mortgage payments tend to be higher at the start. However, as you make repayments each month you build capital and gain access to better mortgage rates, bringing your monthly payments down.

In time, your mortgage repayments can end up lower than the average rent and, what’s more, you’re going to own something very valuable at the end of it – which you won’t have if you rent.

‘Mortgage rates are the same wherever you look’

The mortgage market is very competitive, with new deals coming to market all the time and lenders competing for your business with more attractive products.

At Mojo Mortgages we search thousands of deals in real-time to bring you the latest and greatest rates – as well as the mortgage products that would best suit you.

We’ll even show you all the deals we compared so that you can rest easy in knowing you’ve done a thorough comparison.

‘I’ll have to pay a mortgage broker fee, won’t I?’

Some mortgage brokers charge a fee for their advice, and some also take a fee from the lender – double-dipping when you take out a mortgage.

At Mojo Mortgages we’re different. We compare mortgages and give you a recommendation without charging you a penny – and all from the comfort of your sofa.

Since buying a house isn’t something we do every day, most of us don’t know how it all works. It’s natural, then, that we cling to all the wisdom we can get from people who’ve been through it before.

The thing is, a lot of that well-intended information is inaccurate, misguided and just flat-out wrong.

So, whether you’re a first-time buyer or you’re going through the mortgage process again and can’t remember how it plays out, see how many of these mortgage myths you believe and discover the truth behind them.

‘I should find a house before I find a mortgage’

House hunting before you have a mortgage sorted is essentially putting the cart before the horse. If you do find your dream home, there’s a good chance your offer won’t be accepted unless you have a Decision in Principle from a lender. This says that, in principle, they will lend you enough money to purchase the property.

IT’S BEST TO SEE HOW MUCH YOU CAN AFFORD TO BORROW FIRST AND THEN START LOOKING AT PROPERTIES IN YOUR PRICE RANGE.

It’s best to see how much you can afford to borrow first and then start looking at properties in your price range.With Mojo Mortgages you can find out in as little as 15 minutes.

‘Interest rates are the only deciding comparison factor’

Interest rates are crucial to work out what you’ll pay back on your mortgage. A fixed rate of 3.8% might seem more expensive than a 3.6% equivalent, but you have to factor in the length of the contract, and other costs (such as product fees and valuation fees) that affect the amount you’ll pay.

A higher-rate mortgage deal with no fees attached, for example, might mean you pay less over the initial, fixed period.

‘The bigger the deposit, the better the rate”

Your Loan to Value (LTV) ratio has a big impact on the mortgage deals you can get, but weirdly, a lower LTV doesn’t always mean better rates.

LTV is the amount you borrow versus the value of the property. If you had a £20,000 deposit and had your heart set on a property worth £200,000, your savings would be worth 10% of it. You’d then borrow the remaining 90% - giving you an LTV of 90%.

In some cases, a smaller LTV can actually lead to slightly higher monthly mortgage repayments.

However, it is still a good rule of thumb to say that a bigger deposit will give you lower monthly repayments.

‘My credit rating isn’t perfect – I’ll never be able to get a mortgage’

Higher credit scores definitely help you to get a mortgage at a good rate, but a less-than-perfect score doesn’t rule you out entirely.

Lenders look at much more than your credit score when they assess your application, considering instead your overall financial situation – so don’t be put off.

‘Renting is cheaper than buying a home’

This might be true in the short term because your monthly mortgage payments tend to be higher at the start. However, as you make repayments each month you build capital and gain access to better mortgage rates, bringing your monthly payments down.

In time, your mortgage repayments can end up lower than the average rent and, what’s more, you’re going to own something very valuable at the end of it – which you won’t have if you rent.

‘Mortgage rates are the same wherever you look’

The mortgage market is very competitive, with new deals coming to market all the time and lenders competing for your business with more attractive products.

At Mojo Mortgages we search thousands of deals in real-time to bring you the latest and greatest rates – as well as the mortgage products that would best suit you.

We’ll even show you all the deals we compared so that you can rest easy in knowing you’ve done a thorough comparison.

‘I’ll have to pay a mortgage broker fee, won’t I?’

Some mortgage brokers charge a fee for their advice, and some also take a fee from the lender – double-dipping when you take out a mortgage.

At Mojo Mortgages we’re different. We compare mortgages and give you a recommendation without charging you a penny – and all from the comfort of your sofa.

Mortgages made simple

Now that you’re clued up on some of the biggest mortgage myths, why not see just how simple we make it to apply for a mortgage? Click here to get started.

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