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Many first-time homebuyers lack mortgage knowledge

Many potential first-time homebuyers who are capable of paying deposits have no, or very little, knowledge about mortgages, new research from the Nottingham Building Society has revealed.

The Nottingham-commissioned survey showed that 15% of those who are planning to buy their first home admitted they know nothing about mortgages, while 31% stated they know very little about them.

When it comes to arranging a mortgage, 18% would only consider one from their main bank or building society. Nearly one in four (38%) said they will use a mortgage broker who can search the entire market, and 31% plan to use an adviser recommended to them by someone they know.

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Despite this, many first-time homebuyers do realise the importance of having a large deposit. Some 7% have set a target of securing a deposit of 30% or more, 21% want 20% or more, and 36% want a deposit of at least 10%. Just 13% are aiming for a deposit of 5%, and 23% are targeting between 5% and 10%.

Some 8% of would-be first-time buyers currently have £50,000 or more saved as a deposit, and 13% have between £20,000 and £50,000.

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Iain Kirkpatrick, chief customer officer at Nottingham, said it is encouraging to see that many of those planning to buy their first home understand the importance of having a healthy deposit.

“However, it is concerning to see so many admit they don’t know enough about mortgages generally, and how to find the best deal. Seeking independent advice from an expert adviser can be the key to understanding more and could also save thousands of pounds in repayments,” he said.

The Nottingham Building Society commissioned consumer research company Consumer Intelligence to interview 1,023 UK adults, of which 160 expect to buy their first homes within the next five years. They were interviewed online between February 18 and 21.

By Rommel Lontayao

Source: Mortgage Introducer

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