5 Mortgage Myths Busted by Newhomes
Buying a new home is an exciting and rewarding experience, but it can also be daunting and stressful. One of the most common sources of anxiety for home buyers is the mortgage process. There are many myths and misconceptions about mortgages that can make it seem more complicated and difficult than it really is. That’s why we at Newhomes are here to bust some of the most common mortgage myths and help you find the most suitable deal for your dream home.
Myth 1: You need a large deposit to buy a new home
Many people think that they need to save up a huge amount of money before they can even think about buying a new home. However, this is not necessarily true. There are schemes, incentives and mortgages available that can help you buy a new home with a smaller deposit, such as:
A government-backed scheme that allows you to buy a share of a new home (usually between 25% and 75%) and pay rent on the remaining share. You can then increase your share over time until you own the whole property.
This is a scheme offered by some developers that allows you to trade in your existing home as part of the deal for buying a new home. This can save you time, hassle, and money on estate agent fees and moving costs. You can use this scheme to buy any new home from participating developers.
A 100% mortgage is a loan that allows you to borrow the entire value of the home you want to buy. This means that you don’t need to put any money down as a deposit.
Myth 2: You need a perfect credit score to get a mortgage
While it is true that your credit score is one of the factors that lenders consider when assessing your mortgage application, it is not the only one. Lenders also look at your income, outgoings, savings, debts, and other personal circumstances to determine how much they are willing to lend you and at what interest rate.
Having a less than perfect credit score does not necessarily mean that you cannot get a mortgage. It may mean that you have fewer options or that you have to pay a higher interest rate, but there are still lenders who are willing to lend to people with bad credit or no credit history at all. You can improve your chances of getting a mortgage by taking some steps to improve your credit score, such as:
- Checking your credit report for any errors or discrepancies and correcting them
- Paying your bills on time and in full
- Reducing your debt-to-income ratio by paying off or consolidating your debts
- Avoiding applying for too many credit products in a short period
- Registering on the electoral roll
Myth 3: You need to use the developer's recommended mortgage broker
When you buy a new home from a developer, they may recommend or even insist that you use their preferred mortgage broker or adviser. They may claim that this will make the process faster, easier, or cheaper for you. However, this is not always the case.
The developer’s recommended mortgage broker may not have access to many lenders and products, which means that they may not be able to find you the most suitable deal for your situation. They may also charge you a fee for their services.
At Newhomes we have access to 75 lenders and we do not charge any fees for our advice, although there may be fees from third parties.
Myth 4: You need to get a mortgage before you start looking for a new home
Some people think that they need to secure a mortgage before they can start searching for their new home. However, this is not necessarily true. It may be better to do it the other way around. At Newhomes we recommend that you start looking for your new home first and then get a mortgage once you have found the one that suits you best.
Myth 5: You need to stick with the same mortgage for the whole term
The last myth that we want to bust is that you need to stay with the same mortgage for the entire duration of the loan. It may be beneficial for you to switch or remortgage your loan at some point during the term. Switching or remortgaging your loan may save you money. You may be able to find a more suitable deal or interest rate than your current one, especially if your circumstances have changed or improved since you took out your original loan.
We hope that this blog post has helped you clear up some of the myths and misconceptions about mortgages and made you more confident and informed about buying a new home. If you have any questions or need any assistance with your mortgage or remortgage, please do not hesitate to contact us. We are here to help you every step of the way.