A mortgage expert has answered the 'most Googled questions' from people who are looking to buy their own house for the first time.
Mortgage brokers at L&C Mortgages have analysed search volumes for multiple questions and terms about buying a home. Below we've taken a look at what exactly first time buyers are asking – and the answer from experts.
How much can I borrow?
The first question is 'how much can I borrow?', which was searched for 153,000 times monthly around the globe, reports WalesOnline.
According to experts, the answer is that your mortgage availability will determine the amount you're able to borrow. Mortgage availability is a term used when lenders assess whether you'll be able to afford monthly repayments of your mortgage.
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Lenders assess factors including age, income, and monthly outgoings to determine if you can pay your mortgage back at both the current and potential future rates. They will also look to see if there are any likely changes to circumstances that could affect your ability to pay the mortgage.
They will also ask you to provide information including payslips and proof of other income. People who are self-employed will be asked to show proof of income for at least two tax years in most cases.
How much is my house worth?
The second most googled question has 102,550 monthly global searches and is 'how much is my house worth?'. If you're looking to sell your house or want to find out how much your property is worth before you re-mortgage, a valuation is the most accurate way to determine this.
The best way to get this done is through an estate agent or registered surveyor. Online valuation tools can also be used, but it must be noted that these tools provide a general estimation, and mortgage lenders will want an accurate valuation of the property to confirm its worth.
When will interest rates change?
This question has 58,200 monthly global searches. The experts say according to recent high inflation figures, the Bank of England has increased interest rates over the past year.
The most recent change was in August 2023, when the base rate increased from five percent to 5.25% – the highest since the 2008 financial crash. There is no way to know when interest rates will fall however, it is forecast that rates could increase by a further 0.25 percent or 0.50 percent, potentially peaking at 5.75 percent and then falling over the next five years as inflation eases.
How much deposit do I need?
In fourth place is 'how much deposit do I need?' The deposit you put down should be at least five percent of the property value. However, significant deposits at 10% or 15% allow for better and lower mortgage rates because lenders consider homebuyers with higher deposits as lower risk.
Lenders’ best rates are reserved for those who can put even higher deposits, at 25% or 40%. 100%mortgages are available, however, following the 2008 financial crash, lenders have become extremely cautious when offering these.
If you are successful with a 100% mortgage, lenders will usually require some cash or equity from your family members as security. If you have been gifted a deposit, the lender must confirm that it is a legitimate gift, not something that needs to be repaid. Lenders may also prefer if your gifted deposit is from a close relative, and they may be more reluctant if a friend has gifted it.
How can I get a mortgage?
This question has 26,150 monthly global searches. The first step is determining how much you can afford to spend on your monthly mortgage by analysing your current financial commitments.
You will then need to check your credit history as lenders use this to find out whether you can manage your debt responsibly and they will do this by using data from a credit reference agency like Equifax and Experian. If you have a lower credit score, you can improve your score by ensuring you pay any credit on time and consider setting up direct debits for payments, and close any credit card accounts that are no longer in use.
A large deposit can boost your chance of being successful, but also remember to save up for other fees that will arise, such as stamp duty, surveys, and additional conveyancing fees. It is recommended that you get a DIP, a ‘decision in principle’ or ‘mortgage in principle.’
There are numerous types of mortgages, you will need to determine which you want, the most common being a fixed-rate mortgage. These are common because the interest rate will not change for the duration of the fixed rate, which gives you the security of knowing what your payments will be.
One drawback is that if interest rates fall, there will be no change to your monthly repayments. A good broker will search across the market for you, taking into account your situation and checking lender criteria to ensure you get the best deal that suits your circumstances and will qualify for.
How much is stamp duty?
This final question has 25,050 monthly global searches. Stamp duty, or land transaction tax, is the tax you pay when you purchase a property above a specific value.
The cost of stamp duty can be significant, depending on the price of the property you are buying; therefore, you must factor this into your budget. Stamp duty in England and Northern Ireland ranges from 5-12% of the purchase price if it’s the only property you will own. If you own multiple properties, an additional surcharge will normally apply.
If you’re a first-time buyer you’ll be able to buy a property up to £425,000 before you have to pay stamp duty; for people who currently own or have owned a property before, you’ll pay stamp duty on any property purchase over £250,000.
Wales and Scotland set their own stamp duty rates, which are known as Land Transaction tax and Land and Buildings Transaction Tax, respectively.
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