Almost a quarter (24%) think the mortgage process itself is the biggest challenge when buying a house – more than securing a deposit (22%), Experian has found.
More than a quarter (27%) rely on their family to help them secure their deposit, receiving an average of £7,637. Even then, a third of first-time buyers (33%) took between two and three years to save enough for a deposit.
Amir Goshtai, managing director, Experian Marketplace & Affinity, said: “Getting a mortgage is one of the biggest financial commitments many consumers will make in their lifetime and our research shows it can be overwhelming.
“We have become used to checking our eligibility for products like credit cards and loans for some time now, and there’s no reason the service shouldn’t be available in the mortgage market too.
“Making sure consumers are well informed about their options will give them confidence when speaking to a mortgage broker. Experian’s eligibility tool provides straightforward answers allowing buyers to feel prepared without affecting their credit score.”
Part of the confusion over the application process stems from the additional costs that buyers have to pay. Nearly a third (29%) of buyers admitted they underestimated the costs of moving, after they secured their deposit.
Some 28% underestimated how much they would have to pay in legal fees, followed by survey costs (24%), estate agents (19%) and stamp duty (15%).
Young homeowners – those aged between 25-34 – are the most likely to underestimate the costs of buying, with 44% admitting they did, compared to a third (34%) of 35-44 year olds, 29% of 45-54 year olds and 22% of those aged 55 and older.
And buyers are potentially missing out on the best mortgage deals by failing to check their credit report before they apply.
A huge 74% didn’t check their report, meaning their credit scores may not have been as good as possible before applying, leaving them with limited – and more expensive – mortgages to choose from.
When asked what would make the process easier, most homeowners (37%) said that knowing exactly what mortgage deals they would be eligible for before applying for a mortgage would make a difference.
To help potential buyers better understand their options and guide them through the process, Experian has launched an eligibility tool.
This gives them the opportunity to find out which mortgages they are likely to be accepted for, and how much they could borrow, based on lenders’ criteria. The full launch of the service comes after Experian was one of the first to trial a successful pilot of the tool in 2017.
With the service, buyers are able to “soft search” without affecting their credit score. It aims to revolutionise the mortgage journey for consumers, giving them a better understanding about their options when they speak to a mortgage broker for professional advice.
Seven major mortgage lenders are currently signed up to the tool, with more expected to follow. These are Barclays, West Brom, Aldermore, Family BS, Leeds BS, Co-op (Platform) and Coventry.
Experian has also created a mortgage quiz, designed to help buyers understand more about the house-buying journey.