The process of getting a mortgage can be confusing and overwhelming, but many of the perceived barriers are a result of misinformation, half-truths and outright lies. In this article we look at common mortgage myths debunked by impartial mortgage brokers, helping you to cut through the noise and make more informed choices on your buying journey.
Huge increase in both volume and value of Irish mortgages
The Banking and Payments Federation Ireland (BPFI) has reported the highest increase in mortgage values since 2008, with a whopping €10.5 billion worth of drawdowns in 2021.
Key figures from the Mortgage Drawdowns Report for Q4 of 2021 show an increase of 9.4% in volume and 12.3% in value on the corresponding fourth quarter of 2020, and an increase of 15.9% in volume and 19% in value compared with the previous quarter (Q3 2021).
The volume of approvals reached 53,335 in 2021, representing an increase of 23.6% from the previous year. First-time buyers (FTBs) comprised the single largest segment by volume (54.4%) and by value (54.2%).
Despite these figures, getting a mortgage in 2022 is still seen by many as an insurmountable task. Let’s take a look at some of the most commonly believed myths that may be holding people back from applying.
8 Common Mortgage Myths Debunked
Myth #1: You need a 20% deposit to purchase a home
Fact: The amount you’ll need to have saved depends on the type of buyer you are. For example, first-time buyers can apply for a mortgage with a 10% deposit, regardless of the value of a property.
Myth #2: You can never pay your mortgage off early
Fact: While it’s true that some lenders will impose a penalty for paying off your mortgage early (because they won’t get the full amount of interest they expected), the practice is becoming less common.
Many lenders offer loans with no prepayment penalties, so make sure you find out exactly where you stand if this is something you might want to do in the future.
Myth #3: You must have a perfect credit history to qualify for a mortgage
Fact: A good credit rating is important, but it doesn’t have to be perfect. Every lender will have its own criteria for lending to people with lower credit scores, so you should speak to an impartial mortgage broker about shopping around to find the perfect solution for your situation.
Myth #4: Having debt or loans is a deal-breaker
Fact: Having debt or an outstanding loan is not a deciding factor in and of itself. Lenders want to determine your ability to repay the mortgage, so if you have been making regular repayments on your existing loans, this will be taken into account.
Myth #5: You are bound to your mortgage provider for life
Fact: You might feel as though you’re locked into an iron-clad contract, but the truth is you are free to switch mortgage providers if you wish. The process can seem like a lot of hassle, but switching mortgages could save you tens of thousands of euros in the long run.
The Central Bank of Ireland reported that three in every five eligible mortgage holders stand to save over €1,000 within the first year by switching mortgage providers, and more than €10,000 over the remaining term. So even if you’re happy with your repayments, it’s well worth shopping around to see if you can get a better deal.
Myth #6: Self-employed people can’t get mortgages
Fact: Self-employed people can and do get mortgages. Being self-employed simply means that there are different criteria to be met and additional documents to be submitted during the application process.
Myth #7: You have to wait until you find a property before you can apply for a mortgage
Fact: Before you are officially approved for a mortgage, you will usually be granted ‘approval in principle’. This approval lasts for six months and gives you an idea of what you can afford, meaning you can narrow down your options and start house-hunting straight away.
In fact, many estate agents won’t consider you a truly prospective buyer unless you have mortgage approval in principle in place before submitting a bid.
Myth #8: Your rent is not taken into consideration when you apply for a mortgage
Fact: Lenders want to determine what you could realistically afford to spend on mortgage repayments. Your rent may not have a direct influence on the outcome, but along with making regular deposits into your savings account, it can go a long way toward demonstrating your repayment capacity.
Is it time for you to consider a mortgage?
How many of these common mortgage myths have you heard? How many have you mistakenly believed to be true?
When it comes to mortgages, like everything else, it’s easy to be swayed by misinformation from the internet or a well-meaning friend or family member. Don’t waste your time on hearsay and half-truths. Instead, consult a professional, experienced mortgage broker who can help you separate fact from fiction and do the heavy lifting for you.
Here at Symmetry Financial, we offer reliable and accurate mortgage advice to support you on your journey to buying a home.
Take the first step and book a no-obligation consultation with one of our mortgage experts today.