A recent study highlights a significant knowledge gap among first-time buyers regarding higher loan-to-value mortgage options.
- Nearly 64% of prospective first-time buyers are unaware of the higher LTV options available to them.
- A substantial portion of potential buyers are unclear about the deposit size needed for homeownership.
- The primary barrier to homeownership for many is saving for a deposit, with misconceptions playing a role.
- Industry experts stress the need for better education and innovation to assist potential homeowners.
A recent survey conducted by Pepper Money Specialist Lending has revealed a startling lack of awareness among first-time buyers concerning higher loan-to-value (LTV) mortgage options. The research indicates that nearly two-thirds, or 64%, of prospective first-time buyers are unaware of the existence of these financial options that could potentially facilitate their entry into the housing market.
Further analysis of the data showed that 32% of respondents were unsure of the deposit amount required to secure a home loan, while another 32% believed they needed at least 20% deposit. This lack of information is a major barrier for many, especially since saving for a deposit was cited as the biggest obstacle to purchasing a home.
Despite a strong desire for homeownership, nearly 69% of non-homeowners wish to own a property in the future. However, misconceptions regarding mortgages have caused a staggering 22% to think they need over five years to be financially ready, and a concerning 36% to believe that homeownership might remain out of reach entirely.
Ryan Brailsford from Pepper Money highlighted that the survey, involving over 4,000 British adults, unearths widespread misconceptions. He stresses that many first-time buyers discount their chances of buying a home due to incorrect assumptions about deposit requirements. He advocates for schemes like Shared Ownership and Right to Buy, which allow for entry into homeownership with lower deposits.
From another perspective, Zara Bray of Legal & General points out the critical role of brokers in changing this narrative. She argues that lender innovation coupled with informed brokers is essential for promoting awareness and accessibility of homeownership options. Bray emphasises that increasing public knowledge about mortgage products is not only beneficial for buyers but also enables brokers to grow their businesses.
Extending awareness and understanding of mortgage options is crucial to support first-time buyers in realising their homeownership ambitions.
