The biggest lies about buying a house (and what your parents got wrong)
If you’re saving a deposit for your first home, you’ve probably been inundated with advice from well-meaning family members who just want to help. Some of their tips might be valuable, such as viewing houses in person or paying for a survey. Other suggestions, like cancelling your subscriptions and giving up takeaways, can be frustrating to say the least - especially if your family members bought their first home in the 80s, 90s, or earlier.
Back then, house prices were lower, and saving a deposit didn’t require a five-year strategy. So although your loved ones might have the best intentions, their pearls of wisdom may be less effective in today’s housing market.
Let’s take a look at the biggest lies about buying a house, and what your parents got wrong.
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1. “Just go to your bank for a mortgage.”
Applying for a mortgage with a lender you already bank with could cost you hundreds, if not thousands, even if staying loyal worked for your parents. Banks and lenders all have different criteria and rates, and very few offer better deals to existing customers. To find the best mortgage, you should compare mortgages across multiple lenders, rather than sticking with the one you know best.
A comparison website can give you an overview of the mortgages and lenders available, but you’ll usually have even more choice if you work with an independent mortgage broker.
See all the ways you could buy without applying
At Tembo, we compare thousands of mortgages across more than 100 lenders — with hundreds of broker-only deals you won’t find anywhere else. On average, we boost first-time buyers’ budgets by £88,000. Create a free plan today to see what you could afford.
2. “If you stop buying takeaways, you’ll be able to afford a house.”
There’s no harm in reducing your spending before applying for a mortgage, but skipping the odd takeaway won’t make you a homeowner overnight. The real issue is that essentials like rent, food, childcare and transport have risen sharply, often outpacing wage growth and leaving less room to save.
Most first-time buyers aren’t struggling because they’re spending too much. They’re struggling because they’ve got to save tens of thousands of pounds while paying high rents and still feeling the effects of the cost-of-living crisis.
Top tip: You can grow your deposit faster with the help of a Lifetime ISA. Save up to £4,000 in your LISA each tax year and the government will boost your savings by 25% — up to £1,000 free each tax year. And if you choose a Lifetime ISA with a competitive interest rate, like the market-leading Tembo Lifetime ISA offering 4.33% AER interest rate (variable), you could get your foot in the door even sooner!
You might also like: How to save money: Our top tips to save each month
Speed up saving for your first home
Open or transfer your Cash Lifetime ISA to Tembo to benefit from our market-leading interest rate. Over 5 years, that’s hundreds more towards your first vs the next best rate on the market
Withdrawals for any purpose other than buying a first home (up to a value of £450,000) or for retirement (60+) incur a 25% government penalty, meaning you may get back less than you paid in.
3. “You need a 20% deposit.”
Saving a deposit of 20% or more can give you access to a wider choice of lenders and better mortgage rates, but it’s often possible to buy a home with a smaller deposit of 5% or 10%.
You might even be able to buy a home with no deposit at all, especially if you have a guarantor, a good job with regular salary increases, or you can prove that you’ve paid rent on time and in full over the last 12 months.
As property prices have risen, lenders, developers and the government have been forced to get creative — introducing a range of first-time buyer schemes and initiatives to make homeownership that little bit more achievable. So you may have more options than you think! To find out where you stand, have a play around with our mortgage calculator or create a free Tembo plan.
Learn more: How much deposit do I need?
4. “Shared Ownership and other schemes aren’t worth it.”
If your parents bought their home with a traditional deposit and standard mortgage, they might be sceptical of schemes like Shared Ownership or Deposit Unlock. But for today’s buyers, these schemes could open the door to homeownership sooner and in places they might not otherwise afford. They’re also far more straightforward than you might expect, particularly if you apply through a mortgage broker who’ll guide you through the process.
See what alternative buying schemes you’re eligible for with a Tembo plan
5. “You should always fix your mortgage.”
Fixed-rate mortgages offer certainty. Whether you fix your mortgage for two years or ten, your monthly payments will stay the same until the end of the fixed period, no matter what happens to wider interest rates.
But a fixed-rate mortgage isn’t always the best option for everyone. If interest rates fall or you might want to sell or remortgage the property in the next few years, a variable or tracker mortgage could work out better.
Speaking to an expert mortgage broker (like us) can help you weigh up your options and work out which kind of mortgage deal is best for you.
You might also like: Tracker or fixed rate mortgage: Which one should I choose?
6. "You can’t get a mortgage with student debt.”
Unlike other types of debt, such as credit cards, personal loans and mortgages, student loans don’t appear on your credit report, the repayments are based on your income, and if you lose your job, your repayments stop.
When you apply for a mortgage, the lender will look at your income and outgoings to work out how much you can afford to borrow. If you’ve got a student loan, they’ll include your repayments in their calculations - just like they would if you had car payments, childcare costs, or other responsibilities.
The lender simply wants to make sure you can afford your mortgage repayments on top of your current financial obligations. So your student debt is unlikely to lead to a rejection, especially if the rest of your finances are in good shape.
Buying a home today looks nothing like it did 30 years ago. It’s harder in some ways, but there are also more tools, products and options available than ever before. You just need to know where to look.
So yes, your parents might have bought their first home for £20,000 on a single income back in the 1980s, but that doesn’t mean their advice is always right for the world you’re living in now.
On average, our customers boost their budget by £88,000
We’ve helped thousands of first-time buyers discover how they could afford their first home with the help of higher lending and affordability-boosting schemes. Create a Tembo plan to see what you could afford - it’s free!
