Mortgage Mistakes to Avoid
Written on 9 March 2025 by
Mortgage Mistakes to Avoid
Whether you’re a first-time buyer or a seasoned homeowner, moving house can be a stressful experience. From finding the perfect property to navigating the mortgage process, coordinating with surveyors, and speaking with conveyancers, there are numerous hurdles to overcome before you reach the big day of exchange and completion. Without proper guidance, the process can feel overwhelming.
A study by Legal & General revealed that moving home is considered the most stressful life event by 57% of respondents, surpassing even having a child (32%) and experiencing a divorce or breakup (30%). Nearly half (47%) of movers reported increased stress levels due to the complexities of moving. Moreover, financial worries remain a top concern - 40% of buyers fear they won’t have enough money to cover unexpected expenses. Notably, 27% of young adults aged 18-24 said they would avoid moving altogether.
While moving home will always involve challenges, there are steps you can take to make the mortgage process smoother. Avoiding common pitfalls can significantly improve your home-buying journey.
Mistake 1: Not Getting an Agreement in Principle
Homebuyers generally fall into two categories: those who plan ahead and those who don’t. While obtaining an Agreement in Principle (AIP) isn’t mandatory before making an offer on a property, it’s highly recommended. Without an AIP, you risk heartbreak if you later discover that you can’t borrow enough to afford your dream home. So, what is an agreement in principle? An AIP provides clarity on your borrowing capacity, estimated costs, and potential properties within your budget. Given the recent increase in mortgage rates, securing an AIP is more crucial than ever to ensure affordability.
Mistake 2: Not Seeking Mortgage Advice
Navigating the mortgage market without expert guidance can be costly. Some lenders only offer their products through intermediaries, meaning that relying solely on high-street lenders might limit your options. With mortgage rates constantly evolving, working with an experienced mortgage broker can help you secure the best deal. A broker can also streamline the process, increasing your chances of mortgage approval and keeping you informed of potential rate reductions that might arise during your application process.
Mistake 3: Ignoring Your Credit Score UK
Your credit score plays a critical role in determining your mortgage eligibility and the rates available to you. While those with adverse credit may still secure a mortgage, a strong credit profile provides access to better deals and lower monthly payments. Checking your credit report across the three major credit reference agencies—Experian, TransUnion, and Equifax—ensures that there are no errors or outstanding issues. Keeping up with bill payments, registering on the electoral roll, and avoiding unnecessary credit applications can improve your credit score before applying for a mortgage.
Mistake 4: Taking on Debt Before Applying
Taking out new loans or financing agreements before or during the mortgage application process can negatively impact your borrowing capacity. Lenders assess affordability based on your income and existing financial commitments. Accumulating additional debt can reduce the amount you can borrow and, in some cases, even lead to a mortgage rejection. To ensure a smooth mortgage process, it’s best to avoid taking on new debt until after your mortgage has been secured.
Mistake 5: Changing Your Employment Status
Lenders evaluate income stability when assessing mortgage applications. While a pay increase is generally positive, changing jobs before or during your application could create issues—especially if it involves a probationary period. Some lenders are cautious about applicants in new roles due to the uncertainty of long-term employment. Similarly, transitioning from employment to self-employment can affect your eligibility, as lenders assess self-employed income differently. Maintaining job stability during your mortgage application process can improve your chances of approval.
Mistake 6: Withholding Important Information
Transparency is essential when applying for a mortgage. Providing incomplete or inaccurate information to your lender or mortgage adviser can result in delays or even a mortgage being withdrawn at the last moment. For example, failing to disclose a recent maternity leave could be flagged through your payslips and bank statements, potentially affecting your application. Being upfront about your financial situation allows lenders to assess your circumstances accurately and responsibly, ensuring you secure a mortgage that suits your needs.
Avoiding Costly Standard Variable Rates (SVRs)
A common mistake is allowing a mortgage to revert to the lender’s Standard Variable Rate (SVR) once the initial fixed-term period ends. SVRs tend to be significantly higher than fixed or tracker rates, leading to increased monthly payments. Recent figures indicate that over 600,000 borrowers are currently on an SVR, paying an average of £4,620 more annually than those who refinance to a new fixed-rate deal. To avoid unnecessary costs, start exploring remortgaging options before your deal expires. A mortgage broker can help you secure a competitive rate and ensure a smooth transition to a new deal.
Weighing the Risks of Extended Mortgage Terms
Opting for a longer mortgage term may seem appealing due to lower monthly payments, but it comes at a cost. Extending a mortgage to 35-40 years instead of the standard 25-year term results in significantly higher overall interest payments. Borrowers should consider how extended terms fit into their long-term financial plans, particularly as they approach retirement. While a longer term may ease short-term financial strain, it could create challenges later in life. Balancing affordability with financial security is key when selecting a mortgage term.
How Can John Charcol Make Moving Home Easier?
At John Charcol, we guide you through every step of your mortgage journey. Our expert advisers work to secure the best mortgage deal for your circumstances while managing the entire application process. Additionally, we can help you find a suitable conveyancer, arrange home insurance, and even assist with moving logistics.
Our partner, Just Move In, specializes in home-moving services. From coordinating removals to setting up broadband and utilities, they handle the process for you - completely free of charge. By using this service, the average mover saves around £300 annually and up to 8 hours of administrative hassle. Together, John Charcol and Just Move In simplify the entire moving process, from mortgage approval to settling into your new home.
Moving home doesn’t have to be overwhelming - it can be an exciting new chapter with the right support. Contact us today on 0808 303 5528, and let us help you make your move stress-free.
Category:Nicholas Mendes
