5 First Time Buyer Mortgage Myths

Getting your first mortgage can be a scary experience but rest assured I am here to help guide you through this process and make it as enjoyable as possible.

As I continue my career in mortgage advice on the Island, I find my customers asking similar questions and worrying about similar problems.

So, if you are a first-time buyer (or know someone who is) this is the place to be to bust some of those myths.

1.     I don’t have a 10% deposit; it’s going to take ages to save!

Most banks on the island provide a 90% mortgage and you are likely to have more options available to you and have access to better rates at a 10% deposit level.

However, 95% mortgages are becoming increasingly more available with the banks and three providers out of five are currently offering this product and with reasonable interest rates offered.  

This means our first-time buyers are within a much closer reach than they previously thought!

2.      I can’t afford to buy a home, I will just rent instead

Most people when they come to see me are often shocked at how affordable a mortgage payment can be especially given the low-interest rates at the moment. Often, it is similar or lower than what you could be paying in rent each month.

If you are currently paying rent, you can more than likely afford a mortgage payment.

3.      I have taken out a loan to show that I can afford a mortgage

Yes, the loan will show on your credit report and prove that you can repay this on time, but it will not ‘help’ or ‘increase’ your chances of obtaining a mortgage with the bank.

You do not need to take out a loan or a credit card to be able to obtain a mortgage, in fact it will more than likely reduce what you can borrow. A better thing to do would be to join the electoral roll which can boost your score significantly.

4.      Is it bad to have the mortgage over a longer-term?

Banks can stretch a mortgage term out to as far as 35 years. Granted paying interest over a longer period will not be as beneficial as paying it off over 20 or 25 years since you will be paying the interest off quicker over a shorter period. However, a common misconception about taking out a mortgage is that you are bound by the term originally taken and that you cannot change this.

As the year's progress, your circumstances are constantly changing, i.e. income increases, the family gets bigger and so do your housing needs. As this happens your mortgage needs will also be changing, and it is possible to reduce the term later down the line when affordable to do so.

As first-time buyers, you are getting used to having a mortgage payment and sometimes that may mean having a ‘lower’ repayment each month to begin with is better and more manageable.

Remember, you can always look at changing this as your circumstances change. 

5.      Getting a mortgage can take a really long time

When customers come in for their first appointment, they usually ask me how long it generally takes for a mortgage approval. We can usually get an approval back to you within a couple of days depending on the banks time scales.

In reality, you aren’t going to complete the process start to finish and move in within a couple of days but the usual time scales between the mortgage being approved and completing is typically six to eight weeks. In some cases, this can take longer with the conveyancing process and the valuations being carried out but with each customer’s situation being so unique it is hard to pinpoint a definitive time.

Simple and quick house purchases are not unheard of and it is possible you could be moving in six weeks after you make an offer!

How can we help?

If you are preparing to purchase your first home, whether you are 18 or 40, it is important to get accurate and independent advice to ensure you understand the process fully and you don’t just settle for what your own bank offers you.

We will provide you with advice on the current mortgage market, take care of the application process and liaise with the banks for you. We guide you through the mortgage process from start to finish and hopefully make the journey as enjoyable as possible for you.

If you are thinking about purchasing your first property and are unsure of where to start, and would like some free independent advice then please do get in touch and we would be more than happy to assist you!

Dionne Wall Cert SMP | CeMAP

[email protected] | 01624 612611