Think You Know Mortgages? These 5 Myths Could Be Costing You Money
When it comes to mortgages, most of us have had advice from family and friends. The trouble is, a lot of these so-called facts are myths, with many individuals missing out on better deals or opportunities, due to not doing their own due diligence.
Emma Graham, Business Development Director at Hodge Bank, explained:
“Mortgages are one of the biggest financial commitments people make, so it’s no surprise myths take hold and stick. However, these misconceptions can stop people from even looking at their options, which means they might not be getting the most out of the market.”
According to Emma Graham, these are five of the biggest myths still misleading UK homeowners:
Myth 1: “You need a chunky deposit.”
“Many people think a big deposit is the only way to secure a decent mortgage deal, but that isn’t true. While deposits play a part, there are products available that require a smaller percentage, and some lenders will take a flexible view depending on someone’s situation.
“While a deposit is important for any purchase or move, believing you need to put down tens of thousands of pounds can hold people back unnecessarily, when there are options that make buying or moving more accessible. Lenders consider several elements when assessing a mortgage application, including credit score, missed payments and affordability. Getting advice from an adviser helps people understand their affordability and options, including how much deposit they need.”
Myth 2: “Switching mortgage deals early always comes with heavy penalties.”
“A lot of homeowners believe changing your mortgage automatically means big fees, and that can stop them from even looking at what’s out there. The truth is, while early repayment charges apply in certain cases, they don’t affect everyone and vary depending on the type of product and the stage of the mortgage.
“In some cases, the potential long-term savings from switching far outweigh any costs involved, but this myth can prevent people from exploring their choices in the first place[EG1] . Getting advice from an adviser who will compare the market is the best way to secure a mortgage deal to match individual circumstances.”
Myth 3: “Self-employed people can’t get a mortgage.”
“There’s still a perception that working for yourself is a roadblock to getting on the property ladder, but that simply isn’t the case anymore. Lenders accept a wide range of income evidence, whether it’s tax returns, company accounts, or contracts.
“While it can take a little more paperwork, being self-employed doesn’t lock you out of the market, more lenders than ever are recognising the different ways people earn and manage their income today[EG2] . Recognising the large number of self-employed people in today’s workforce, specialist lenders offer increasingly flexible lending criteria for those with income outside the ordinary.”
Myth 4: “You’re stuck with your lender once you sign.”
“Some people think once they’ve chosen a lender, that’s it for the long haul, but the mortgage market just doesn’t work that way. It’s a competitive space, and switching or remortgaging is a common part of homeownership.
“Believing you’re tied to one provider forever can lead to people missing out on opportunities to find a product that better suits their needs as their circumstances change.”
Myth 5: “Older borrowers can’t get mortgages.”
“It’s often assumed mortgages are only for younger buyers, but that’s an outdated view. Many lenders now consider applications from older customers, recognising that people are working later in life, living longer, and have very different financial needs compared to previous generations.
“Age alone is no longer the barrier it once was, but the myth continues to make people think their options are more limited than they really are.
The mortgage market has changed, and these myths don’t reflect how flexible it really is today. Understanding what’s true and what isn’t, can make all the difference when it comes to making informed choices about your home and your finances.”
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