Five Miserable Myths You Shouldn't Believe

There's been a lot of doom and gloom about the housing market recently. But you shouldn't believe everything you read...

The property market is in freefall! It's the wrong time to buy! You should sell up and rent! Another day, another headline coupled with some well-meaning advice about the property market. We look at some popular housing market myths and sort the fact from the fiction.

Myth 1: It's the wrong time to buy

Whether this is true or not depends on how you view your property: as a home or as an investment? Sure, if you're buying with the sole intention of making some cash, it's a risky time to buy. But if you can afford the mortgage and you look at bricks and mortar as your home, somewhere to base you life and as a sanctuary from the outside world, it's never the wrong time to buy, in my opinion. Admittedly, you might not end up making tons of cash out of it but isn't having somewhere to call your own the important thing? (Find out what my fellow Fool Neil Faulkner discusses this question in more depth here.)

Myth 2: BTL landlords should sell up

When property was cheap and prices were on the way up, BTL was a no brainer and millions of landlords have done very well out of it. However rising house prices and higher mortgage costs have made it tougher to get BTL deals to add up and result in a profit.

As fellow Fool Donna Werbner explains here, the collapse of Bradford & Bingley could spell bad news for landlords as getting a mortgage deal is set to become that much harder for landlords.

However landlords who took a cautious approach to borrowing, have equity in their property and who are willing to see their investment as a long-term one shouldn't panic yet - and shouldn't sell up right now either.

Myth 3: It's impossible to get a mortgage

Impossible? No. But it's definitely getting trickier to get a good mortgage deal whether you're a first-time buyer or remortgaging.

As Esther Shaw explains here, mortgage rates are going up again after more turmoil in the financial markets, namely the bailout of insurer AIG, the collapse of US investment bank Lehman Brothers, the rescue of HBOS by Lloyds TSB and the nationalisation of Bradford & Bingley.

If you're looking to remortgage in the next couple of months my advice is to act fast before rates increase even more. Get advice from a broker and be prepared to pay more than you are at the moment.

If you're a first-time buyer, get saving in order to build up a decent deposit - otherwise you'll find yourself omitted from pretty much all the decent rates for first-timers.

Myth 4: House price falls are good news for people moving up the ladder

This could be true. House price falls can actually work out in the favour of someone wanting to move to a bigger or more expensive home. If prices fall 10%, a £200,000 property loses £20,000 but a £300,000 property loses £30,000, leaving someone moving up the ladder £10,000 better off.

However, house prices do not fall uniformly and properties in some areas will hold their value better than others. So whether you'll save money by trading up in a falling market depends on what and where you are buying and selling.

But again, it goes back to what I was saying about whether you see your home as an investment or somewhere to live. If you're family is expanding, for example, you'll need the extra room whether it works out to be cost effective or not.

Myth 5: You should sell to rent

Personally I see selling up to rent and then buying again when prices have fallen as a disaster waiting to happen.

But as discussed here, plenty of people are doing it.

Admittedly you might be able to re-enter the property market in a year or two's time and buy a bigger house for the same money you sold a smaller one for, or a similar-sized property for less money. But in my opinion the hassle of moving twice and the insecurity of being a tenant make selling to rent a risky plan.

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