When you’re about to buy your first home, every stage of your decision-making process can feel fraught with anxieties.
From how much of a deposit you’ll need, to trying to get a mortgage when you’re self-employed, there’s a lot of misinformation out there. Sadly, much of this misinformation may deter you from buying your first property. Now’s the time to unpick some myths.
Understand that there are lots of misconceptions about first time home loans
Both online and in real life, you’ll stumble across common misconceptions about home loans. For example, while a 20% deposit is ideal, it isn’t an absolute requirement. Choosing one of the big four banks doesn’t mean you’ll get the best deal. Similarly, you don’t have to go with your current bank.
In reality, the factors that affect your mortgage application are attributed to you and your lifestyle. Understanding more about how this works will help you head for the right broker and agreement.
The factors that do affect your mortgage application
Before we begin, each factor will be unique depending on the situation. They include, but aren’t limited to:
Some people might need a 20% deposit, but some will not. A few will secure a 95% LTV mortgage. The property’s location, an excellent credit score, and a fairly clear credit history can lower your deposit requirements.
Some people might feel deterred from acting as a guarantor if they believe that they’ll be held responsible for missed payments forever. They’re released from their responsibility once you’ve paid off enough of the mortgage.
Another common misconception is that you need a dual income to get a mortgage. If you think about this carefully, it doesn’t make sense. The bank only needs to have proof that an income, either combined or solo, will cover the repayments. If that comes from a single application, it’s still possible to get a mortgage.
- Existing loans and savings with low interest rates
You don’t have to be loan free to be accepted for a mortgage. If your repayment terms won’t impact your ability to meet your mortgage payments, you can have a loan at the time of your application.Tempted by the idea of a low-interest rate? Many will have you believe that you’ll make savings in the long term. Such agreements could also come with heavy administration fees and excessive repayment terms. Before heading for the cheapest option, consider all other financial factors.
The secret to first-time mortgage success is awareness
If you’re aching for a mortgage and you want to know what the secret to getting one is: it’s awareness. Arm yourself with information that’s relevant to your personal circumstances. If someone tells you something, investigate the facts for yourself.
At Achieve Homes, we always recommend seeking professional advice when assessing your circumstances and making financial decisions.