Majority of first-time buyers confused by mortgage jargon
More than half of prospective first-time buyers are confused by common housing market and mortgage terminology, according to research.
This complicates the process for young people as they try to take their first step on the property ladder and means they could be missing out on the very initiatives that are designed to make the market more accessible to them.
Help to Buy confusion
The data, which comes from Aldermore’s latest First Time Buyer Index, shows that more than 52 per cent of prospective first-time buyers struggle to understand the Help to Buy equity loan.
Just under half, meanwhile, can’t make sense of the Lifetime ISA and almost 60 per cent are mystified by the Starter Home Initiative. The figures are lower for shared ownership (35%) and the Help to Buy ISA (36%), but still make alarming reading.
Young people who bought homes in the past three years said they struggled to understand the terminology surrounding the process. Asked what was the hardest part of buying their first home, other than raising a deposit (10%), first-time buyers pointed to the procedural processes.
Legal jargon (9%), the length of the purchasing process (9%), the length of the mortgage process (9%) and admin (8%) caused particular difficulty.
On the upside, 71 per cent of first-time buyers said going through the process was worth it, while 82 per cent were happy with their mortgage deal.
Complicated process costs
But the complications involved in house-buying are costing first time buyers, with 52 per cent saying they spent more than they intended.
One third of those who bought in the past three years had a property sale fall through, costing them on average £1,545 in fees. Among those who bought in the past six months, the figure rises to £1,814.
Damian Thompson, director of mortgages at Aldermore, said: “Buying a first home is a challenging process and it is being made harder as future buyers clearly do not feel they are being informed enough about the options open to them.
“Collectively as an industry, we need to do a better job with educating prospective buyers to ensure they are knowledgeable of the products and initiatives available so they are not missing out.
“This will help ease the stress and anxiety of what should be an enjoyable and exciting time in their lives.”