The five MOST searched mortgage questions answered by a property expert
With terms including the word ‘mortgages’ generating over half-a-million Google searches a month (595k) in the UK alone, it’s clear that many prospective homeowners are still confused about how mortgages work, what they’re eligible for, and how to navigate a challenging market.
To help provide clarity, Luke Williams, Specialist Property Advisor, at Pure Property Finance, tackles the most searched mortgage questions in the UK.
`1. How much mortgage can I get? (17,000 searches a month)
“Most lenders will let you borrow around 4 to 4.5 times your annual income, however this can vary due to some underlying factors. If you have existing debts or your credit score isn’t as good as it should be for a mortgage, you may have to borrow a little less.
Other financial commitments, such as other mortgages, car loans and child maintenance costs might also have an impact, and affordability checks are much stricter today, with lenders assessing every single monthly outgoing and financial dependent, to ensure that they don’t encounter repayment problems further down the line.”
2. Are mortgage rates going down? (4,900 searches a month)
“There’s definitely some optimism that rates might soften a little bit throughout the year, but it won’t be a dramatic drop. With inflation starting to ease ever so slightly, lenders are still pricing conservatively and are still reluctant to make any huge changes.
The Bank of England base rate is a key driver in interest rates, we’ve started to see this come down consistently, with two members of the MPC most recently voting for a 0.5% cut. Mortgages may follow in the coming months; but won’t reach pre-pandemic levels for a long time.
3. How to get a mortgage? (3,800 searches a month)
“Getting a mortgage starts with preparation. Firstly, you’ll need to visit a broker to find out exactly who to go with for the best rates for your circumstance, especially if your mortgage is more complex; you’re self-employed, have multiple income streams or you need a more flexible approach.
Once you’ve had a Mortgage-in-Principle, you’ll then need to prove your income, show a great credit history and show proof of funds for your deposit. Your deposit should typically be no less than 10%, however, the more you’re able to pay upfront, the less interest payments you’ll end up paying over the years.”
4. What is a mortgage? (3,700 searches a month)
“A mortgage is essentially a big loan from a bank or a lender that will help you afford a home. If a house is £400,000 and you only have £50,000 to pay towards it as a deposit, then the mortgage will be for £350,000 which you’ll have to pay off over a number of years, usually 25-35 years, with interest.
The property acts as collateral, meaning that the bank or lender can repossess it if the repayments aren’t made on time.”
5. Can you get a mortgage with bad credit? (2,400 searches a month)
“You can get a mortgage with bad credit, but it’s definitely harder than if your credit score is good. Specialist lenders offer mortgages to those with poor credit or who’ve missed payments.
A major downside is that the rates can be higher than a normal mortgage and the deposit needs to be larger than 10%. A good broker can help you find the right specialist lender if you are in this circumstance, and might advise on whether it would be worth building your credit score up beforehand.”
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