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The Biggest Mortgage Myths!

The Biggest Mortgage Myths!

Hi. Anthony here from Bolt Mortgages. In this video, we're going to be going through the mortgage myths and misconceptions that people have when getting their first property.

A lot of people get advice or hear things from their friend Dave down at the pub, or their Auntie who bought a property 30 years ago, and because the mortgage market is so dynamic things changes very frequently. Today in this video, we'll be going through the main mortgage myths that we hear and explain them in a bit more detail as to how they are incorrect.

If you're in your arranged overdraft, it is still possible for you to get a mortgage. However, lenders will use this as an outgoing when they're calculating their affordability. The lender's main priority is that you're not financially overstretched. So, as long as being in your arranged overdraft does not overstretch your finances you can still get a mortgage. If you're actively using your bank's overdraft or paying one-off, any repayments that you're making towards this overdraft will be calculated in the lender's affordability assessments.

Contrary to popular belief, you can still get a mortgage if you've got bad credit. Not all bad credit carries the same weight when the lenders are assessing your affordability. For example, bad credit that was six years ago will not be looked at in the same light as bad credit that was calculated a year ago. The further away from the bad credit incident, the higher chance you've got of being accepted for the mortgage.

Some lenders, if the bad credit was a long time ago, some lenders and High Street lenders will take a bit more of an open-minded approach, and they can still potentially lend to you as long as you've got the right deposit to put down alongside that. If your bad credit was a bit more recent and you can't get agreed with a High Street lender, there are still lenders that specialize in people that have got impaired credit. A word of warning, however, because there is a higher risk of lending to yourself because of the credit issues, the interest rates tend to be slightly higher than the same rates that you would get with the High Street banks and building societies.

If you're moving home and you are in a fixed-rate mortgage, there is an option for you to port your mortgage over, which is in theory, you're just picking your mortgage up that you've currently got, taking it to the new home and then borrowing any additional amount you need to on top of it. For this to be accepted, the lender would still need to evaluate your new home and the top-up mortgage would need to be with the same lender.

The benefit of porting your mortgage over is that fixed-rate mortgages tend to come with early repayment charges. You porting your mortgage over means you're not breaking your current fixed-rate term and, in theory, you can transfer it over and borrow the additional amount without incurring any extra early repayment costs.

Lenders will still assess your affordability when you're porting your mortgage over. So if you're borrowing an extra £50,000 and your current mortgage is 250,000, the lenders will calculate your affordability to see if you can borrow that full 300,000. Subject to that affordability being there, there should be no reason why they can't move your mortgage over to the new home, as long as they're happy with the property you're buying. Keep in mind when you're porting your mortgage over the top-up that you'll be getting to buy the new property is not going to be at the same interest rate that your current mortgage is.

When it's time to remortgage and your existing fixed-rate deal has expired, staying with the same lender might seem like it's the easiest thing to do. However, just because one lender was offering you the cheapest deal when you've got the mortgage up doesn't necessarily mean they can offer you the better deal now. Just because your existing lender was offering you the better deal when you first took the mortgage up, it doesn't necessarily mean they're going to be offering the same one now. For the half an hour to an hour conversation with a mortgage advisor, they'll be able to scour the entire market and see if anybody's offering you a better deal than what your current lender is.

Consider looking into your mortgage options three to six months before your current mortgage expires. That gives you plenty of time to scour the market, speak to advisors, and get the new mortgage set up before your product goes on the standard variable rate.

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