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Half of first-time buyers don’t understand the mortgage process

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“This is a cohort with no confidence and knowledge about both the mortgage and insurance processes, meaning they need more guidance.”

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According to a survey by Paymentshield, 52% of UK adults aged 18-34 say they understand the entire mortgage process from start to finish, from fair to very poor.
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In comparison, about a third (32%) of 35-44 year-olds said they had the same misunderstanding, and this dropped to 25% among 45-54 year-olds.

For the first time in ten years, the average age for a first-time buyer in the UK has risen this year from 30 to 31, with the average cost of a first home in the UK at £196,223 according to research by Savills.

UK adults under the age of 35 showed a similar lack of understanding of the types of insurance required at different stages of life, with 53% stating that their knowledge was fair or very poor. This could explain the study’s finding that if 25-34 year olds were to purchase home insurance, they would rather do so through comparison sites rather than consult a professional broker or financial advisor (40% vs 6%).

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The research suggests that one of the biggest barriers to understanding the insurance and mortgage processes could be financial jargon: a third (33%) of 25- to 34-year-olds say they are not, or not at all sure, that they would understand the language used to explain financial products and/or services, with a similar proportion (37%) among the 18-24 age group.

James Watson, sales director at Paymentshield, said: “The finding that 25- to 34-year-olds are almost seven times more likely to say they prefer price comparison sites over financial advice if they were buying home insurance is alarming, and there is a risk that this already vulnerable cohort of insurance may be unsuitable for their needs.

“Hopefully, measures such as the implementation of the FCA’s GI pricing practices study will address this somewhat by creating a fairer market that offers consumers value-oriented products, rather than an automated race to the bottom where the cheapest price is offered at the lowest price.” price, at the expense of all other considerations.

“Even after the end of the stamp holiday, the new buyer market presents an important opportunity for advisors: this is a cohort with no confidence and knowledge about both the mortgage and insurance processes, meaning they need more guidance. Advisors are perfectly positioned to support them – and not just for a one-time transaction: first-time buyers also have more general non-life insurance needs.

“By targeting new buyers and providing valuable, tailored and, as the YouGov research suggests, necessary guidance, advisors have the opportunity to become a trusted expert these buyers can rely on and for the rest of their lives.” recommend their lives.”

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The post Half of first-time buyers don’t understand the mortgage process appeared first on Notesradar.

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