We look at some common misconceptions about mortgages so that you can arm yourself with accurate information and feel more confident about your search for a mortgage loan…

Buying a home is an exciting milestone, but it can also be a bit daunting. There are some misconceptions surrounding the mortgage process that can make it seem more complicated than it is. We’ve debunked some common mortgage myths to help put your mind at ease and make the home-buying journey a little smoother.

Myth 1: You can’t get a mortgage if you’re self-employed

It’s a common misconception that self-employed individuals can’t get a mortgage. While it’s true that obtaining a mortgage as a self-employed borrower can mean supplying more documentation or information, it’s not impossible. Depending on the nature of your self-employment, lenders typically require two years of tax returns to verify your income. You may need to provide additional documentation to prove your business is profitable and stable.

Myth 2: You can’t get a mortgage if you have a complex income stream

If you receive income from several sources, you may worry that this will make it harder to get a mortgage. However, lenders are becoming more flexible in their requirements, and some offer mortgages that consider different income streams. Be prepared to provide documentation to verify your income and show that it’s sustainable, and don’t assume that having multiple sources of income will automatically disqualify you from obtaining a mortgage. Speak to an experienced mortgage broker about your situation, and they will offer bespoke advice.

Myth 3: You can’t get a mortgage if you’re older

There is no official maximum age limit on applying for a mortgage, though lenders usually impose their own limitations. However, it’s generally possible to get a mortgage in your 60s, provided you can show that your pension and investment incomes can meet your mortgage payment when you retire. Lenders understand we lead more transient lives, and people can go through separations when they’re older, often meaning they need to make a fresh start with a new property. In fact, many lenders offer mortgages specifically tailored to older borrowers, such as Retirement Interest Only Mortgages and equity release. Seek advice for more information.

Myth 4: You need a large deposit to get a mortgage

While it’s true that having a larger deposit can make it easier to qualify for a mortgage and obtain more competitive interest rates, you can still put down a small deposit. Many lenders offer mortgages with a deposit as low as 5%, though ideally, 10% is the minimum recommended deposit amount. 

Myth 5: Having an Agreement In Principle guarantees you’ll get a mortgage

An Agreement In Principle (AiP) doesn’t guarantee you’ll get a mortgage and isn’t the same as a formal mortgage offer. An AiP is a certificate from a lender showing you have passed their credit scoring process, which indicates how much they may be prepared to lend to you. Once you find a home you want to buy, the lender will need to verify all of your information and the home’s value before granting final approval. Be prepared to provide additional documentation and for the lender to ask for more details as the application progresses.

Myth 6: You can’t get a mortgage if you or your partner has a poor credit history

While it can be challenging to get a mortgage if you’ve had defaults on loans or County Court Judgements (CCJs), it’s not necessarily impossible to get a mortgage with bad credit. Some lenders are more flexible than others. Some won’t consider a person with bad credit, while others will be more open-minded. A good mortgage broker will know which lenders to approach on your behalf, so seeking advice is essential. The situation also depends on how long ago you had a credit problem. Missed payments, defaults and CCJs disappear from your file after six years.

More Information

Need advice on getting a mortgage? Whether you’re a first-time buyer, upsizing to a bigger property or an older borrower, we’re here to help. Contact us today.

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