Busting Common Mortgage Myths: What You Need to Know

When it comes to mortgages, the amount of information out there can be overwhelming—and not all of it is accurate. At Roff Financial, we believe that informed clients make the right decisions. So, let’s bust some common mortgage myths that could be holding you back from achieving your homeownership dreams.

Myth 1: You Need a 20% Deposit 

A widespread misconception is that you need a 20% deposit to buy a home in the UK. While a larger deposit can help you secure a better mortgage rate and reduce your monthly payments, it’s not a hard-and-fast requirement. Many lenders offer mortgage products with deposits as low as 5%. Additionally, government schemes can make it easier for first-time buyers to enter the property market with a smaller deposit.

Myth 2: Only Perfect Credit Scores Qualify for Mortgages

While a high credit score can certainly make it easier to get a mortgage, having less-than-perfect credit doesn’t automatically disqualify you. In England, various mortgage options are available for those with lower credit scores. Lenders consider multiple factors, such as your income, employment history, and the size of your deposit, in addition to your credit score. Specialist lenders may also be more flexible in offering mortgage solutions tailored to your financial situation. 

Myth 3: dECISION IN PRINCIPLES and Mortgage Offers Are the Same

It’s essential to understand the difference between a Decision in Principle (DIP) and receiving a formal mortgage offer. A Decision in Principle (DIP) is an initial assessment of your finances, giving you an idea of how much you might be able to borrow. However, it’s not a guarantee. A mortgage offer is a formal document issued by a lender after a thorough review of your financial situation. Having a mortgage offer in hand is crucial when making an offer on a property, as it shows sellers you are a serious buyer.

Myth 4: Renting Is Always Cheaper Than Buying

In some areas of England, renting might seem more affordable on a month-to-month basis, but over the long term, buying a home can be more cost-effective. When you rent, your payments go to your landlord, with no return on investment. By purchasing a property, you build equity, which can increase in value over time. Furthermore, mortgage rates in England have been relatively low, meaning monthly mortgage payments can be comparable to, or even less than, rent in many regions.

Myth 5: The Best Mortgage Deals Are Always with High Street Banks

While high street banks are a popular choice for mortgages, they’re not the only option. Many competitive deals can be found with smaller banks, building societies, and online lenders. Mortgage brokers can also offer access to exclusive deals that aren’t available directly from lenders. 

Myth 6: You Can’t Pay Off Your Mortgage Early

Many people believe that paying off their mortgage early will incur significant penalties, but this isn’t always the case. In England, most mortgages allow for some level of overpayment without penalty, often up to 10% of the loan balance per year. Even if there is a penalty, it may be worth it in the long run to save on interest payments. It’s important to check the terms of your mortgage and consult with your lender or broker to understand your options.

Myth 7: Once You Have a Mortgage, You Can’t Switch Lenders

Another common myth is that once you’ve secured a mortgage, you’re locked in for the entire term. In reality, many homeowners in England remortgage—switching their mortgage to a new deal or lender—to take advantage of better interest rates or different terms. Remortgaging can save you money or provide more flexibility as your financial situation changes.