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First-time buyers ‘don’t know enough about mortgages’

A lack of mortgage knowledge could be holding buyers back, research claims.

A survey of more than 1,000 consumers by Nottingham Building Society found gaps in awareness about how much of a deposit first-time buyers need and how to secure a home loan.

The Nottingham’s findings reveal that 15% of those surveyed who are planning to buy their first home confirm they know nothing about mortgages, and 31% say they know very little about them. 

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When it comes to arranging a mortgage, 18% will only consider one from their main bank or building society. 

Almost one in four 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.

Despite this, many first-time buyers 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.

Iain Kirkpatrick, chief customer officer at The Nottingham, said: “It’s encouraging to see that so 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.”
 

Iain Kirkpatrick, chief customer officer at The Nottingham, said: “It’s encouraging to see that so 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.”

  • Samantha Sullivan

    With the market still rising the problem we face daily is having to reject offers from the 5% deposit deal buyers. Yesterday alone I had one try to offer 15k over the marketing price to try and secure it, which would be the highest offer BUT, when that property is down valued they don't have the means to put in the difference. A cash buyer can come in and pay what they like, thus creating a sold price comparable for the next person who wants to offer with the 5% deposit, then the asking price will be fine but same cycle if they need to offer over due to the demand.

    It's a sad state of affairs.

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