A major lender has launched a series of events to educate first-time buyers amid concerns misunderstandings about mortgages are hindering homeownership aspirations.
Santander quizzed 2,000 non-homeowners and uncovered some major knowledge gaps and misconceptions amongst many aspiring first-time buyers as they prepared to make one of the biggest purchases of their lives.
Earnings and borrowing
Nearly six in 10 of those surveyed wrongly believed they would be able to borrow up to ten times their income when taking out a mortgage.
In reality some lenders might consider up to four-and-a-half times an applicant’s income but many other factors will also be taken into account when assessing affordability.
Exchange and completion
Meanwhile three in five mistakenly thought an ‘exchange’ was when the keys were handed over on moving day and nearly half expected to receive fees already paid refunded if a chain collapsed.
However, neither of these statements is true. Indeed, exchange can take place as much as several weeks before completion of the homebuying in process and is actually where solicitors swap signed contracts. Keys are handed over on completion day.
Too much jargon!
There was also much confusion – understandably – over some of the jargon used in the mortgage process. The term ‘LTV’ threw three quarters of aspiring first-time buyers surveyed by Santander.
Indeed, the majority thought the initials stood for “Long Term Value”. In fact they stand for loan-to-value, which describes the proportion of the house on which you need to take out the mortgage.
So, if you purchase a house for £200,000 and put down a 10% deposit of £20,000 your loan-to-value (LTV) would be 90%.
Toff: Made in Chelsea star offers an insight
Santander has recruited Made in Chelsea star and previous winner of ITV’s I’m a Celebrity Get Me Out of Here Georgia ‘Toff’ Toffolo, who recently purchased her first home in London, to discuss her experiences.
Indeed, she has endured some of the pitfalls and lessons of the house buying process first-hand.
She said: “Buying your first home is the most exciting thing, it’s so easy to get swept up in the thrill of having something that is ‘yours’.
“When I was buying my first home, I wish I’d known more about the whole process. I would have nightmares that moving day would never come, and I’d be living amongst cardboard boxes forever – I thought I’d be drawing a Christmas tree and decorations on corrugated cardboard rather than decorating a lovely a new home!”
The events are being run in Santander’s 614 branches across the UK. They are open to anybody, no matter what stage of the homebuying journey they are at, and participants don’t need to be an existing Santander customer to register.
To book a place at an event in a local branch simply click here.
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If you have a mortgage question or are confused about any aspect of the process, What Mortgage’s expert Jeni Browne is on hand to answer you questions.
Click on this link to find out more and to submit your question.
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