Boon Brokers, which conducted the poll of 1,000 first-time buyers, said there was a “clear lack of education” within schools, as 97% learned what they knew about mortgages outside of the school system.
Most respondents – 27% – relied on their families to inform them about mortgages, while 23% said they had not educated themselves at all.
More than a fifth – 22% – used search engines to find out more and a tenth turned to the news.
Some 5% learned about mortgages through social media, 3% used podcasts, and 7% had the help of their friends.
When asked what affected the mortgage interest rate they could achieve, 29% said their income and 26% said the mortgage term. Some 16% said the loan-to-value (LTV) limit, while 6% believed age had an impact.
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A small share – 4% – said additional income could impact the mortgage rate available to them, while 2% suggested their job role could influence this. Some 14% said they did not know what affected this.
Gerard Boon, managing director of Boon Brokers, said: “LTV is the key driver of mortgage interest rates. As a mortgage is the largest financial commitment that most people will ever own, it’s vital that the general public understand what dictates their mortgage payments. Without this knowledge, they may unknowingly agree to a mortgage with a higher interest rate than is necessary.
“For example, as interest rates change in 5% brackets, if someone has a 24% or 25% deposit, this could significantly impact their available interest rates. By just having that extra 1% deposit in this scenario, they may be able to access far lower interest rates.”
With many relying on credit to support their finances, Boon Brokers found respondents had a lack of knowledge of how this could determine their access to mortgages.
Just 18% correctly said this stayed on a credit file for six years, 34% did not know the answer and 2% believed it would not show up.
