More than one in two first-time buyers “do not fully understand” the mortgage process, a major study has revealed.
The research, published by home insurer Paymentshield, suggests that more help should be available for young people trying to get onto the housing ladder.
According to the report, some 52% of UK adults aged 18 to 34 believe that they have a “fairly or very bad understanding” of the whole mortgage process from beginning to end – which may include property valuations, types of mortgages (such as fixed or variable), repayment terms, and early exit fees.
But this falls to 32% – or one in three – among adults aged 35 to 44, and just 25% – one in four – among adults aged 45 to 54.
This suggests that it is first-time buyers, whose average age has risen to 31 this year, who are the group most likely to be deterred from purchasing a property – even if they have the funds and income to do so.
The research also suggests that this group lacks an understanding of property-related insurance products, with over half (53%) saying they have a “fairly or very bad understanding” of products such as home insurance, mortgage insurance and life insurance.
In addition, this group are the least confident dealing in “financial jargon”, with a third (33%) saying they do not understand the language used by banks, insurers, or financial services providers.
Commenting on the study, James Watson, sales director at Paymentshield, said: “Even beyond the end of stamp duty holiday, the first-time buyer market presents a key opportunity for advisers: this is a cohort lacking in confidence and knowledge about both the mortgage and insurance processes, meaning that they need more guidance.
“Advisers are perfectly positioned to support them – and not just for a one-off transaction: first-time buyers also have more overall needs in terms of general insurance.”
If you are a first-time buyer and need help understanding the mortgage process, our expert team is perfectly positioned to help.
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