A third of first time buyers confused by the homebuying process
Help to Buy and differences between valuations are two major problem areas
Alex Johnson has been part of The Independent's online team since 2007. He has been writing about microarchitecture on his internationally-acclaimed Shedworking blog since 2006 and is the author of Shedworking: The Alternative Workplace Revolution. His latest book is Bookshelf, published by Thames & Hudson.
Tuesday 05 November 2013
Around a third of first time buyers say that they do not understand the processes involved when buying their first home, according to a report from the Royal Institution of Chartered Surveyors.
More than a quarter of first time buyers also admit to not knowing the difference between a market valuation (what the property is actually worth), an agent's appraisal (an estimate of its selling price) and a survey (a surveyor's assessment about the property's condition).
The findings come as the RICS has launches a series of free guides to help buyers and sellers understand exactly what they need to know covering issues such as home surveys, property auctions and boundary disputes.
Results from a survey commissioned by the Building Societies Association (BSA) confirm the problem, indicating that 43% of active first time buyers and other home movers are confused about the benefits of the Government’s Help to Buy: mortgage guarantee scheme - almost a third admit they do not know if there is a difference between a 95 per cent mortgage offered by a lender which has signed up to the scheme and a 95 per cent mortgage from a lender which has not.
Paul Broadhead, BSA Head of Mortgage Policy said: "It is unsurprising that some consumers are finding the Help to Buy: Mortgage Guarantee Scheme difficult to get their heads round. The situation has been complicated by the launch of two very different schemes both called Help to Buy.
"It is essential that providers offering loans under the scheme leave applicants in no doubt about the terms of their mortgage loan. I am particularly concerned that a reasonable minority of active first time buyers believe that they can borrow more than normal and that they are in some way protected – neither assumption is true. In fact a 95 per cent mortgage through Help to Buy: mortgage guarantee is exactly the same as a standard 95 per cent mortgage. It is vital that these myths are dispelled at application to prevent the possibility of consumers misunderstanding their mortgage loan and later feeling misled."
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