First-time buyers: Where do millennials stand on the property ladder?
Around two-thirds of people aged in their 20s and 30s hope to buy a new home in the next five years, according to a survey.
Some 66 per cent of people in their 30s and 67 per cent in their 20s are considering buying a property in the next five years, compared to 38 per cent of adults across all age groups, consumer credit reporting agency Experian found.
But nearly half (49 per cent) of people in their 30s and 42 per cent in their 20s are worried they will never appear “mortgage-ready” to providers. Three in 10 (27 per cent) people said they were unsure of how to prepare to get a mortgage.
Misunderstandings
Experian also found some misunderstandings in the mortgage application process.
Nearly two-thirds (62 per cent) of those surveyed believed it was either not possible to secure a mortgage when in debt, or were unsure whether they could do so.
But Experian said that making regular, on-time payments to reduce any existing debt can potentially increase someone’s credit score and help them appear more mortgage-ready to lenders.
It said people should only get a mortgage if they can afford the monthly repayments and existing debts will be factored into mortgage lenders’ affordability assessments.
More than half (54 per cent) of people surveyed thought they should only apply for a mortgage once they had found their desired property, or were unsure about this.
But Experian said people can secure a decision in principle with a lender before formally attempting to secure the mortgage loan, giving them an accurate idea of what they can borrow and their overall budget.
Choice of lender
Nearly a quarter (24 per cent) of people wrongly thought they could only get a mortgage with their existing bank, or were unsure about this. In reality, people are free to shop around.
James Jones, head of consumer affairs at Experian, said: “It’s important to understand what properties are in your price range and the types of mortgages available to you.”
He added: “Taking the time to improve your credit score when searching for your perfect home will help you access the best mortgage rates and, as a result, have more disposable income every month to spend on other things.”
Around two-thirds (67 per cent) of people surveyed said no one had taught them about mortgages. Some 2,000 people were surveyed across the UK in June.