In the first part of our “What is….?” mortgage series, our Gregg Davies debunks a few mortgage myths.
Shopping around will harm my credit score
We hear this all the time, it is a common thought, and is only partly correct! It’s right that if you spend all weekend calling into banks and completing on-line lenders’ decision in principles then there will be several credit checks against your name, some of which will have left a footprint.
Always check that you meet the criteria of the lender you are talking to, and make sure that their deals are what you are interested in. We will guide you on this before any credit score is carried out.
I haven’t found a property yet
It doesn’t matter! in fact many estate agents and new house builders will want to see that you have proof of your mortgage before they will take you seriously.
You cannot actually apply for a mortgage before finding your dream property, but you can do a lot of the leg work. I would suggest that you gather all of your paperwork and decide on the mortgage deal type that is best for you. We will help you all the way with this. You can get a Decision in Principle (DIP) to ensure that you are ahead when viewing properties.
Lowest rate is best
Nope! This is rarely the case… most deals come with lender arrangement fees, whereas others may have a free valuation or cash back. Do your maths! This is particularly true if you are having a smaller mortgage where a higher rate, with additional incentives and no fee may well be better than the cheap headline rate.
We will always source a mortgage deal on ‘total to pay’ which gives a true and full indication of the mortgage cost over the term of the initial deal.
First time buyers always need a deposit
Actually there are now lenders who welcome help from parents. There doesn’t always need to be a deposit, this can sometimes be ‘guaranteed’ or the amount placed into a locked savings account. This can be quite complex, and we do loads of these for our clients.
I have a low credit score, I stand no chance of a mortgage
Not always true. Whilst many lenders do credit score, this is only part of the story. Depending on if you have any negative information on your credit file, there may well be lenders able to lend to you.
A low score quite often is only a sign that you haven’t had much active credit, or you may not be on the electoral register