Buying a house is both exciting and stressful at the same time and whether you are a first time buyer or climbing the property ladder, you are guaranteed to receive lots of advice throughout your house buying journey. Now some of this advice will be helpful of course, however, some advice although given with best intentions intended, may not be so helpful. The mortgage market is constantly changing so what was relevant 5 or 10 years ago might not still apply today.
“The cheapest mortgage is the best option”
“Get the biggest mortgage you can afford”
“You are too old to get a mortgage”
“You can’t get a 95% mortgage any more”
“Interest only mortgages are no longer available”
Although we are all looking for a good deal; when it comes to mortgages, the cheapest deal is not always the best option. It is important to look at the bigger picture. Low monthly payments may look attractive, but is it a Tracker or Fixed Rate mortgage? A Tracker mortgage could shoot up quickly and unexpectedly if base rates rise. Fixed Rate mortgages, on the other hand, will keep your monthly payments within budget for a certain number of years. So it may be worth choosing a Fixed Rate mortgage with higher monthly repayments than a Tracker mortgage with lower monthly repayments.
Also, consider fees that apply. Does your cheap mortgage offer incur large arrangement fees? Are there exit fees and early repayment charges to consider that could cost you when you decide to move in a few years time?
If you are not sure which option is best for you, then get advice from our experts for free.
This is a very outdated saying from a time when property values and wages were rising rapidly. Investment in property grew considerably in a short period of time so although you might be stretched to start with, it would soon become affordable and you would have already made money from your property value.
We now know that wages and property price increases are not guaranteed and that there is a risk of being in a situation of negative equity. You are now advised to borrow a realistic amount that you can afford now and in the foreseeable future.
A good mortgage adviser will be able to advise you how much you can afford.
You are likely to get this advice from the age of 40 but in reality, most lenders will lend to people up to the age of 70, with some lending past this age. If you are retired, instead of earnings income, a lender will want to see evidence of your pension and investment income
95% mortgages are hard to get but there are now several schemes in place such as the Government’s Help to Buy, which aims to help more people become home-owners of new build properties with just a 5% deposit. The government loans you the extra 20%, effectively making it a 75% mortgage.
Since the credit crunch hit in 2008, interest only mortgages have become less common. They are, however, still available if you have a relatively big salary, a good deposit and a sound investment plan to pay back the mortgage. Lenders have become much stricter with offering interest only mortgages but they are starting to make a comeback. These are just a few of the common myths you might hear when buying a home. For up to date and reliable advice, talk to us for free. Our experts are waiting for you, just visit www.propillo.com
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