Recent market updates reveal a rise in U.K. mortgage approvals, offering signs that the housing market is altering. As first-time buyers set their sights on ideal properties, a study by Barratt Homes indicates that 41 percent of people will encounter misleading mortgage information on social media.
Information about the finings comes from Terry Higgins, Group MD for TNHG New Build Mortgage Services, who dispels the most common mortgage myths in line with the survey. Many of these errors come from social media.
With 94 percent of Gen Z using social media regularly in 2023, half of prospective first-time buyers aged 18-26 admit to encountering mortgage misinformation on these platforms.
A mortgage outcome is shaped by specific lending requirements
Higgins draws attention to a TikTok video that highlights how the outcome of a mortgage is ultimately determined by strict lending factors like employment history, tax accounts, and having a large deposit sum to put towards a new home. While these factors are significant and influence borrowing capacity, most lenders are flexible, and take into account an individual’s personal circumstances.
According to Higgins: “There are currently over 50 lenders and each of them have their own criteria and flexibility to cover most people’s personal and financial circumstances. Ultimately it is their job to ensure your new mortgage is affordable both now and in the future.”
He adds: “Some examples of this are how they recognise different types of income like overtime or bonuses or how they consider any current commitments you may have like personal loans or credit. Some lenders will lend you more if you choose to take your new mortgage over a longer term (typically up to 35 years), as this makes the monthly payments more affordable.”
Banks scrutinise every historical transaction and hold this against a mortgage application
Citing social media again, Higgins finds one video that has so far attracted over 3,000 views, a user discusses the significance of bank statements when applying for a mortgage. Higgins discusses how it is a common belief that banks meticulously scrutinise all historical financial statements, going through them with a fine-tooth comb and questioning your spending history.
Instead, Higgins finds: “Rather than delving into an exhaustive analysis of your financial history, lenders prefer to focus on only three key aspects: your income, regular expenses to assess affordability, and ensuring you are living within your means. Typically, lenders only examine the previous two or three months of statements. If, within this limited timeframe, your financial metrics align with the lender’s criteria, you can become eligible to secure a mortgage.”
This leads Higgins to assess: “The lender’s job is to ensure your new mortgage is affordable both now and in the future. As much as lenders want to invest to help you secure a mortgage, they are also there to ensure the investment is the right opportunity for all parties. It’s also worth noting that not all lenders ask for bank statements, so it’s helpful to double check what your lender expects from your application.”
Which social media platforms do Gen Z prefer for mortgage guidance?
Findings from the study also reveal that platforms including YouTube, Reddit, and TikTok are now prominent choices for young first-time buyers in their quest for insightful guidance throughout the home-buying journey. Higgins points out that 1 in 3 people will go to YouTube as the first source of information.
This leads Higgins to strike a note of caution: For aspiring homeowners, it’s important to remain vigilant when it comes to mortgage misinformation online.
