The Worst Mortgage Advice Ever!

When it comes to buying your new home or considering remortgaging there are no end of well meaning friends, family members and colleagues who are happy to provide you with the benefit of their advice. While this is well intentioned, not all mortgage advice is helpful and here are some of the worst pieces of advice we have come across:

1. Don’t bother with a decision in principle because it can damage your credit score.

It is true that a decision in principle does not guarantee that your application for a mortgage will be accepted and with some lenders applying for a decision in principle will leave a hard record on your credit score. However, when it comes to demonstrating that you are serious about purchasing a property, having a decision in principle can be extremely valuable and many estate agents will insist on this before taking a property off the market.

A good mortgage adviser will also be able to assess your affordability and personal circumstances and recommend the right lender up front or at least get a decision in principle from a lender that does not leave a hard record on your credit score.

2. Take out a new credit card to boost your credit score

Being able to demonstrate your financial security through the well managed use of credit cards etc over a long period of time can help to bolster your credit score. However, opening a new credit card when you are applying for your mortgage is probably not the best time and may be detrimental to your application.

3. Focus on the maximum you are able to borrow

Many house buyers focus on getting the highest amount that the lender is prepared to advance instead of first asking the question “how much can I afford?”

A property purchase is a major commitment so it is vital that you ensure that the mortgage is going to be affordable in the long term. Again, a good mortgage adviser will be able to guide you through this.

4. Always go for the lowest interest rate

The interest rate is only one of the considerations when choosing a mortgage. Other factors such as whether the interest rate is fixed or variable, the lender’s arrangement fees, the length of time the rate is fixed for (if a fixed rate), the rate the fixed rate reverts to at the end of the initial term, etc all need to be taken into account rather than simply looking at the headline grabbing low interest rate.

As mentioned at the top of this blog, the advice of friends and family is almost always well intentioned but probably shouldn’t be relied on entirely and a conversation with a professional qualified Mortgage Adviser could help avoid some of the pitfalls that can befall the unwary borrower.


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