Prospective first-time buyers struggle with common housing and mortgage jargon, as over half (52%) not understand the Help to Buy equity loan very well, Aldermore’s First Time Buyer Index has found.
This was closely followed by the Lifetime ISA, with over two fifths (47%) showing a lack of understanding.
Damian Thompson, director of mortgages, Aldermore said: “Buying a first home is a challenging process and it is being made harder as future buyers clearly do not feel they are being informed enough about the options open to them.
“Collectively as an industry, we need to do a better job with educating prospective buyers to ensure they are knowledgeable of the products and initiatives available so they are not missing out. This will help ease the stress and anxiety of what should be an enjoyable and exciting time in their lives.”
“At Aldermore, we understand getting on the property ladder is no easy feat. Our human approach to lending enables us to provide a straight-forward process that explores all options open to borrowers and guides people through the process from beginning through to completion.”
This means many first-time buyers could be missing out on much needed assistance to get on the housing ladder, up to £12,000 from the government through the Help to Buy: ISA scheme or £1,000 a year with a Lifetime ISA.
And by not being conscious of the shared ownership option or the Help to Buy equity loan scheme, would-be buyers may not be aware of all the pathways to home ownership open to them, even with small deposits.
This has contributed to nine in 10 (89%) believing it is difficult to get on the ladder – which has not improved in six months.
This has led to nearly two-thirds (65%) of prospective first-time buyers feeling that buying a home is unachievable for them at the moment, and seven in 10 (71%) thinking the government does not do enough to support them.
This lack of understanding was a theme among first-time buyers who had bought within the past three years, as over half (57%) said the house buying process was confusing.
Reinforcing this when asked what was the hardest part of the process, other than raising a deposit (10%), first-time buyers said that the procedural processes were the most challenging.
Legal jargon (9%), the length of the purchasing process (9%), the length of the mortgage process (9%) and the admin involved (8%) were of particular difficulty.
However, there is light at the end of the tunnel with seven in 10 (71%) saying the stress of the process was worth it and eight in 10 (82%) were happy with the mortgage deal they got.
The difficulty of the process is hurting prospective buyers’ wallets also. Of first-time buyers that bought in the past three years, a third (33%) had a property sale fall through costing an average of £1,545 spent in fees.
This rises to £1,814 for those that bought their first home in the last six months. This led to over half (52%) of first-time buyers stating they spent more than they intended.