6 in 10 First Time Buyers think they can borrow 10X income…
Research from Santander has highlighted some of the misconceptions and knowledge gaps among first time buyers.
Almost 6 in every 10 first time buyers think they can borrow up to 10 times a single or joint income. 76% thought that LTV stands for “Long Term Value” and refers to expected house value increases over time. About interest rates, 39% of first time buyers were under the impression that the interest rate on their mortgage would remain the same for the life of the mortgage.
It was disturbing to see that 71% of first time buyers believe, that when buying a property, the seller (vendor) is obliged to tell them of any problems or defects on the property. Furthermore 63% thought that mortgage interest rates were different in parts of the UK, with cheaper interest rates applying where prices for homes are lower…
Is it fair for parents to take on the responsibility of education?
There’s a real need to help educate and advise our first time buyers. Using a regulated mortgage adviser might be one solution. But, when it comes to first time buyers looking to take out mortgages from internet execution only websites, this is a big concern for us at MDFS. How on earth can we, as an industry, advocate non advised online mortgages, with no redress available to those who apply, when the knowledge gap appears so wide. If these findings from Santander are common with first time buyers, there’s probably little, or no chance, with no fault of their own, that they’ll understand the implications of non-advised execution only mortgage applications.
3 in 5 First Time Buyers think that “exchange” is when you hand over your home keys on moving day and 43% would expect to get all mortgage associated fees refunded if a chain breaks down…
Despite these misconceptions, first-time buyers are generally well prepared for the financial costs associated with getting on the ladder. In fact, it seems that, on average new buyers are overestimating the typical fees involved for solicitors, surveys, removals and land registration. Interestingly, while 58% admit they do not know what stamp duty is, new buyers are aware that it is an added cost that they must factor into the purchase.
Miguel Sard, managing director of mortgages at Santander, said: “The home buying process can sometimes seem very complicated and old fashioned, with lots of confusing jargon to get your head around.
“While first-time buyers can access a raft of help and advice when it comes to picking the right mortgage, we want to go one step further, helping first-time buyers on the road to homeownership in as many ways as we can. From tips on budgeting to avoiding solicitor scams; buying insurance to having a kettle at the ready on moving day; our new events are designed to arm buyers with everything they need to know to avoid potential pitfalls and get the home that’s right for them.”