This myth has caught out a significant number of people. The idea is that it doesn't matter how much you borrow, the size of the deposit, the term of the mortgage, or the interest rate. All that matters is the monthly payment.

There's much more to a mortgage than the monthly repayment.

The Deposit
The deposit determines how much equity you have in your home from day 1. Historically a deposit of 10% to 20% was normal. In boom times when banks become desperate to lend, and economies depend on finding new buyers, rules get relaxed and 100% mortgages mean no deposit is needed.

The 100% deposit leaves the buyer extremely exposed to the risk of negative equity if house prices fall.

The argument against the deposit is that it isn't possible to save while renting. In the current market this makes no sense. Renting is cheaper than buying, so if you can't afford to save for a deposit, then you probably can't afford the mortgage at all.

A deposit buys you a cushion against negative equity.
It reduces the amount you need to borrow.
It establishes an ability to save which translates into a capacity to handle increases in interest rates etc.

The Term
Another sign of a market gone mad is the very long mortgage term. A sensible length of time to pay back a mortgage is in the region of 25 years. When mortgage terms need to be stretched to 40 years you are heading for trouble.

Each month your mortgage payment is split between the interest in the outstanding debt, and a payment that reduces the outstanding debt (the principal).

The interest has to be paid in any case, but by stretching the term of the mortgage you can reduce the amount paid against the principal each month.

Longer terms mean a lower monthly payment, but critically it increases the overall amount you pay in interest over the life of the mortgage.

The "Interest Only" mortgage is essentially a never ending mortgage. Each month you pay the interest and nothing goes against the principal.

While this might make the monthly repayment affordable, it's clearly not a sensible situation. You are effectively renting.

The Interest Rate
The interest rate is the biggest factor in determining the overall cost of the mortgage. When buying at low interest rates such as 2% or 3% there is a very real potential for the interest rate to double. Given the amount of the mortgage repayment that covers interest this can lead to an almost doubling of your monthly repayment.

The most dangerous aspect of interest rates is the introductory or teaser rate. This is an artificially low rate that convinces the buyer that they can afford the mortgage, but which increases after an initial period of as few months, or years.

Those who think only about the monthly repayment are at risk of signing up to mortgages that they think they can afford, but which are based on extra long terms or artificially low rates. This combined with a risk of negative equity is a recipe for trouble.