There’s a lot of misinformation out there about mortgages. We hear these myths all the time from clients, so here’s the truth behind some of the most common ones.

If you’re new to buying a home, check out our top tips for first-time buyers to get off on the right foot.

Seven mortgage myths demystified

1. "Will I get a better or worse interest rate if I change the term of my mortgage?"

No, the term of your mortgage has no bearing on what interest rate you get offered. Interest rates are usually decided by the size of deposit or equity that you are using: the larger the deposit the lower the interest rate. Having a longer mortgage term (30-40 years) gives you the advantage of a lower monthly payment however it also means that your paying off the capital much more slowly, which means paying more interest overall, so you have to weigh up your preferences.

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2. "But I already have a Decision in Principle with a lower interest rate.."

A Decision in Principle does not secure a mortgage rate. In fact, in most cases, you can't actually secure an interest rate until the point that you actually apply for the mortgage. Interest rates go up and down, depending on the market, so until you're ready to apply you should treat any rates you see as indicative. The main purpose of a Decision in Principle is to show how much you can borrow and that you have passed the credit check with a lender - this particularly useful when you're looking to make an offer with an estate agent.

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3. "If I get declined for a mortgage will it damage my credit score and mean I'm unable to apply elsewhere?"

No. There are 2 types of credit checks, a soft credit check and a hard credit check. Most Decisions in Principles will have a soft credit check - this doesn't leave a mark on your credit file - however all applications will have a hard credit check. It's true that a hard credit check can impact your credit score however in reality the impact is very minimal. Unless you have a very fragile credit score to begin with, most people are able to apply multiple times without incurring any noticeable damage to their credit.

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4. "A fixed rate is better than a variable rate"

One option is not 'better' than the other, it all comes down to personal preference. Someone who wants the certainty that their mortgage payments won't change will prefer a fixed rate whereas someone who wants the flexibility to exit their mortgage more easily will prefer a variable rate. In particular variable rates are often chosen by people looking to sell their property, this is because they enable the mortgage to be redeemed at any point without paying high fees.

If you’re considering switching your mortgage deal, find out whether a remortgage or a rate swap is better for you here.

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5. "But my business turnover is higher so why can't I borrow more?"

Lenders don't use the turnover of your business to work out how much to lend you, they use your profit figures. This matters because if your business has grown but your expenses have increased then it may affect how much you can borrow. In the same way, if your business expenses are decreased this could allow you to borrow more as it may mean a higher profit. Naturally there could be tax implications for this so any decision on how to complete your tax returns or accounts should be consulted with your accountant beforehand.

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6. "I can't get a mortgage because I'm on maternity leave"

This is a surprisingly common one and completely untrue, that is, if you're employed. Lenders are not supposed to discriminate against women on maternity leave so although your payslips may show a lower income during this period, they will still accept your full salary income as long as you can specify when you will be going back to work. You may need a letter from your employer confirming this.

Keep in mind that for self employed applicants this won't work the same way as your income is based on the business profit, which may have been impacted by the maternity leave. If you’re self-employed and looking for a mortgage, find out where you can get one and what to expect here.

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7. "But I have 999 on Experian?"

While having a good score on a credit agency site is a good thing, it doesn't necessarily translate to a lender's assessment of your credit profile. While lenders do check your credit history, they also look at your overall credit profile. This could include your profession, age, the size of the loan or deposit as well as other factors. Therefore, to be sure, it's always worth completing a Decision in Principle to check you have passed the lender's internal checks.

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How Crunch can make mortgages easier

Mortgages don’t have to be complicated. At Crunch, we’re here to make things simple and clear, with honest advice that fits your situation. Whether it’s your first home or you’re switching deals, we’ll help you find the right mortgage without the usual stress. Give Crunch Mortgages a try and see how easy getting a mortgage can be.