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7 Common Mortgage Myths That Could Be Holding First-Time Buyers Back
Do you find that common mortgage myths are holding you back from exploring your options as a potential homeowner? If so, it’s time to verify the facts!
There are plenty of misconceptions surrounding mortgages that can be off-putting to first-time buyers, but the good news is that many of these are mainly untrue.
In this article, we delve into the seven most common mortgage myths to give you peace of mind and the confidence to move forward on your journey towards homeownership.
7 common mortgage myths that may be holding you back
Pursuing a mortgage can be daunting enough to navigate without having false information thrown into the mix. Thankfully, we’re here to simplify the process. Read on to find out more about the most common mortgage myths standing in the way of first-time buyers.
#1: Renting is cheaper than buying
Renting offers a flexible solution to many individuals and comes with lower upfront costs than buying a home. However, it is not always the most economical option.
Rent in Ireland has now reached unprecedented levels, with monthly payments often exceeding those of mortgage holders. Add to this the headache that comes with viewing properties, which many would-be tenants describe as resembling job interviews, and the rental market can be frustrating and costly in equal measure.
Oftentimes, the biggest hurdle that forces people back into a rental cycle is the inability to save a deposit for a house in a reasonable space of time.
Exploring certain government initiatives, such as the Help to Buy and the First Home Scheme, can alleviate such issues. Creating a viable financial roadmap that will promote more savings over a shorter timeframe is also a proactive step forward.
By putting measures in place to speed up your journey out of the rental market and onto the property ladder, you will soon be in a position to invest in your future home.
#2: A 20% deposit is required to buy a property
While many believe that a deposit of at least 20% is required to buy a house, this is untrue.
First-time buyers – and as of recently, second-time buyers – can apply for a mortgage with a deposit of 10% in the bank, immediately smoothing the path to homeownership.
It’s also important to note that as of October 2022, first-time buyers can borrow up to four times their salary in order to purchase their dream home – a hike from the 3.5% stipulation that was previously in place.
#3: You can’t get a mortgage if you have existing debt
Having existing debt or an outstanding loan isn’t automatically a dealbreaker. What lenders are looking at is your overall ability to repay the mortgage. If you’ve been consistently making your loan repayments on time, this will work in your favour and be considered as part of your application.
That said, it’s still a good idea to reduce your debts where possible before applying, as lower regular repayments can improve your borrowing potential. However, always consult your mortgage broker before using your savings to clear debts; doing so might not be necessary and could even put you at a disadvantage.
#4: You must have a clean credit record to qualify for a mortgage
While having a good credit rating is certainly beneficial, it doesn’t need to be flawless. Each lender has different criteria when it comes to assessing applicants with lower credit scores.
That’s why it’s a smart move to speak with an expert mortgage advisor. They won’t just search the market for the right deal, they’ll also assess any irregularities in your circumstances, help you explain them clearly to lenders, and ensure your application is presented in the best possible light.
#5: It’s impossible to secure a mortgage if you’re self-employed
It’s a common misconception that self-employed people have a very tough time securing a mortgage. However, the reality is that many self-employed individuals successfully navigate the mortgage process every year.
The key difference is that the application process may involve a few extra steps.
Lenders will typically ask for additional documentation to verify your income and business stability, such as two to three years of certified accounts and a certificate of tax compliance. Although there is more involved with compiling the paperwork, it is possible for self-employed applicants to access the same competitive mortgage rates and terms as any other borrower, particularly if they seek guidance from a knowledgeable mortgage advisor.
#6: You can’t apply for a mortgage until you find a property
Before receiving formal mortgage approval, most buyers are first granted what’s known as ‘approval in principle’ (AIP). This gives aspiring buyers a clear indication of how much a lender is likely to offer based on their current financial situation.
Approval in principle typically lasts for six months, giving you a realistic budget to work with so you can focus your property search on homes that fall within your price range.
More importantly, having AIP in place shows sellers and estate agents that you’re a serious and financially prepared buyer. Many estate agents won’t even entertain an offer unless you can provide proof of AIP, as it adds credibility to your bid and can help to fast-track negotiations.
#7: You cannot change mortgage providers at any point during the term
This is one of the biggest and most costly myths facing mortgage seekers.
While many people believe that signing a mortgage contract means you’re locked in for the long haul, homeowners in Ireland have the flexibility to switch mortgage providers if they find a better deal elsewhere.
Although switching might seem like a hassle at first, the potential savings can make it well worth the effort, especially with recent rate cuts that could save homeowners up to €7,000 on their mortgage repayments. Your mortgage broker will break down any costs involved in switching and help you assess whether it’s the right move for your situation.
Ignore common mortgage myths and move towards homeownership with our help
When it comes to mortgages, it’s easy to be influenced by conflicting advice. Whether it’s something you read online or a tip from a well-meaning friend or family member, relying on hearsay or outdated information can lead to confusion, unnecessary stress and even missed opportunities.
This is why the help of an expert mortgage advisor, such as the team at Symmetry Financial Management, can be indispensable to aspiring homeowners.
With our first-time buyer mortgage advice service, we are committed to making the mortgage process straightforward and stress-free. Our team of expert advisors offers honest, practical support to help you take confident steps toward owning your first home.
Ready to get started? Contact us today to book a no-obligation consultation with one of our mortgage specialists. Let’s make your homeownership goals a reality!
If you’d like a free, no-obligation consultation for your mortgage, pension or financial needs, get in touch here, call us on 01 6831673 or email us directly on info@symmetryfinancial.ie.
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