It’s time for a mortgage shake-up
David Castling (pictured) is director of intermediary lending at Atom bank
As first-time buyers become the dominant force in the buying market, the time has come to freshen up the mortgage process to satisfy the needs of the modern buyer. The reputation of mortgage complexity well and truly exceeds itself, but understanding what the market needs will lead to better education.
We surveyed 2,000 first-time buyers who are currently in the market and the outcome proved that although the financial aspect was a major obstacle that first-time buyers faced, the distinct lack of education around mortgages has begun to take its toll mentally, as the majority stated that starting the process had given them anxiety – which lead to many not pursuing a mortgage at all.
The industry is guilty of letting “Mum and Dad” become the mortgage process spokespeople, as parents continue to be the first source of information for first-time buyers when looking to enter the process. For right or for wrong, the fall guy for this outdated information and advice continues to be the mortgage companies, with most first-time buyers stating that the industry doesn’t understand the challenges the modern-day buyer faces.
With an array of new terminology being thrown at first-time buyers, most feel like they’re back in school again. Words including HLC, Tie-in period and Collar proved to top the list of terms that had never been heard of. This, coupled with a vast amount of helpful schemes that hadn’t been heard of, including: Right to Buy, Family Offset Mortgage and Starter Home Initiative, paint an even bigger picture of the lack of education.
The majority have adopted a “learn as you go” policy when taking on their first mortgage, which lends itself to the high percentage of buyers leaving the market, even once starting. By working with first-time buyers, we’ve been able to understand what’s outdated and what can make their lives a little easier. Cutting back the jargon and simplifying terms in a more consumer friendly manner may not ease every worry, but what we can do to help is regularly publicise the financial aspects first-time buyers face when looking for their first home. We do believe though that more can be done to aid with the process as a whole.