New data from Mortgage Advice Bureau (MAB) has found that 89% of mortgage advisers believe first time buyers need more education on purchasing a property and what is needed for a mortgage application. In a recent survey of over 200 mortgage advisers, MAB sought to discover some of the main sticking points advisers come across in first time buyer mortgage applications.
Encouragingly, the survey found 54% of advisers have first time buyers approaching them ‘very often’ for advice before getting started on their mortgage applications. Looking into the reasons why prospective buyers approach mortgage advisers before starting their applications, the most common reason was to find out how much they can borrow (96%), followed by finding out what they can afford in terms of monthly costs and budget (88%).
Other reasons why first time buyers approach mortgage advisers include seeking advice on what will help them be accepted for a mortgage, such as getting on the electoral roll (41%), getting a credit check (33%), and to get advice on what government support schemes are available to them (27%).
Mortgage advisers also revealed the most common reasons they see as causing delays in first time buyer mortgage applications. Lack of deposit or unrealistic aims in terms of affordability (78%) comes out as the top reason. Only 13% of advisers said that first time buyers approached them for advice on how to boost their credit scores, yet poor credit scores (68%) was the second biggest reason for delays in mortgage applications, highlighting the need for more education for buyers looking to get on the property ladder.
Most common reasons for delays in first time buyer mortgage applications:
| Lack of deposit/ unrealistic aims in terms of affordability | 78% |
| Poor credit scores | 68% |
| Paperwork not in order | 41% |
| No evidence of gifted deposits e.g. no paper trail from family bank accounts | 31% |
| High debt-to-income (DTI) ratio | 29% |
| Applicants not registered on the electoral roll | 19% |
| Missing application information | 17% |
| Recent job moves | 13% |
| Too many past credit applications/payday loans | 13% |
Completing a mortgage application involves a thorough process and requires a lot of organisation and planning, so it can be hugely stressful if any delays occur in the process. 60% of advisers expect an issue or fault in an application to delay the process by an average of less than a month, and 25% said they expect delays to be between one and two months.
To help streamline the mortgage application process and support buyers on the journey to home ownership, MAB has launched the Home Buying App. The app aims to help buyers by providing useful tips on the home buying process as well as creating a checklist for buyers to stay on track with their buying journey. Users can also set up a savings goal through the app, which will help prompt them on how much to put aside each month for a deposit in order to meet their goal in the time frame they have chosen.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, said: “Getting onto the property ladder is an exciting moment in anyone’s life, but many find it to be one of the most stressful experiences. It’s only when buyers start thinking seriously about purchasing a property that they realise what is required and so can be caught on the back foot. The mortgage application process isn’t something that is taught in schools and the majority of people are left to figure things out for themselves, which can make the process a little daunting.
“This is why MAB has created the Home Buying App, to help alleviate some of the stress and anxiety first time buyers may have when it comes to the home buying journey. This app is there every step of the way to give prompts when needed and to share helpful tips with buyers who are starting or even thinking about the mortgage application process.”