A recent study highlights a significant gap in knowledge among potential first-time homebuyers.
- Two-thirds of first-time buyers are not aware of higher loan-to-value (LTV) options available.
- Many potential buyers are unsure about the size of deposit required to purchase a home.
- A considerable number of first-time buyers feel financially unprepared for homeownership.
- Financial misconceptions may deter potential buyers from entering the housing market.
The recent Pepper Money Specialist Lending Study sheds light on a concerning knowledge gap among those looking to buy their first home. The research found that nearly 64% of potential first-time buyers are unaware of higher loan-to-value (LTV) options, which could potentially make homeownership more accessible. This lack of awareness is compounded by the fact that a significant portion of these individuals is unsure of the deposit size required for purchasing a home.
Moreover, 32% of respondents indicated that saving for a deposit is their biggest hurdle in achieving homeownership. Many believe they need to save at least 20% of the property’s value, despite accessible alternatives that allow for smaller deposits. This misconception presents a substantial barrier and contributes to the hesitation among potential homeowners.
The study further reveals that while a majority of non-homeowners aspire to purchase property in the future, a significant 22% anticipate that it will take more than five years to reach a financially secure position for buying a home. Alarmingly, 36% of those surveyed believe they may never be able to afford a home of their own.
Ryan Brailsford from Pepper Money highlights the importance of addressing these misunderstandings. He stresses the need for awareness surrounding schemes like Shared Ownership and Right to Buy. Such initiatives, supported by lenders, offer potential buyers the chance to enter the property market with fewer restrictions on deposit size.
Zara Bray from Legal & General echoes this sentiment, pointing out that brokers have a vital role in educating customers about available options. Brokers can bridge the knowledge gap, guiding potential buyers through the complexities of the housing market and introducing them to innovative products that cater to their needs.
Addressing these financial misconceptions could open the door for many to achieve their dream of homeownership.
