29 February 2012
Nationwide Building Society has today released details of research1 showing how some borrowers are left confused by key property and mortgage terms.
A lack of knowledge about mortgages could end up costing borrowers money and certainly adds to the challenges of buying a first home.
Over 40% of people who have looked into buying a house say that jargon confuses them. First-time buyers are the most likely to be left baffled due to their lack of knowledge.
Around a third (31%) of those surveyed knew that LTV means loan to value and refers to the ratio between the size of the loan they wish to borrow and the value of the house they want to buy. One in ten (9%) did not know that APR stands for annual percentage rate.
14% of people did not know that negative equity means when the value of the mortgage, which is outstanding on the property, is more than the market value of the property.
A quarter (25%) of people did not know that they become the owner of the property once the sale is completed, with some believing it was when the offer is accepted, or when they had exchanged contracts. Almost half (47%) of those surveyed knew that it's obligatory to survey the house they are looking to buy if they need a mortgage.
Nationwide is committed to helping people decipher the jargon used when buying a property. A featuring money experts Alvin Hall and Michelle Slade discussing whether jargon makes it difficult for people to buy their first home is also available. Journalists are free to embed this onto their websites. The Society also has a range of independent impartial guides available at , including the , which can help homebuyers understand the main terminology.
Martyn Dyson, Nationwide's Head of Mortgages, said: "Buying a property is likely to be the biggest financial commitment most people will make. A lack of understanding of the key terms used during the mortgage process could mean that people end up spending more money than is necessary.
"People shouldn't be afraid to ask a lender or an independent mortgage broker to explain terminology that they don't understand, especially if they are taking out a mortgage for the first time.
"Nationwide continues to find innovative ways to support borrowers through the process of buying a property whether it be improved education or the launch of competitive products like Save To Buy savings account"
Notes to editors:
1 Research conducted on behalf of Nationwide by Opinion Matters. 1,107 UK adults were surveyed between 06/01/2012 and 10/01/2012.
- Read Nationwide's comprehensive and independent First Time Buyer's Guide. Alternatively, view the guide at Nationwide Education website.
- The Society commissioned an update of the First Time Buyers' guide after engaging with consumer groups like Which? and gathering feedback from first-time buyers. In order to better meet the needs of the first-time buyer generation, the guide is downloadable to both smartphones and tablets such as the Apple iPad. QR codes are also published on Nationwide's first-time buyer leaflets, enabling first-time buyers to scan or download the guide straight to their mobile device.
- The guide is completely independent and does not recommend any particular mortgage product or lender but aims to help first-time buyers through the complexities associated with buying a first home.
- Nationwide's YouTube channel hosts the about the guide which includes Jargon Busting information and so provides another channel through which first-time buyers can access help and information.
About Nationwide Building Society
Nationwide is the world's largest building society as well as one of the largest
providers and a top-three provider of
mortgages in the UK. It is also a major provider of
Nationwide has around 15 million members.
Since the credit crunch began in 2007, Nationwide has remained profitable against a very difficult economic environment. In the half year ending September 2011 Nationwide made a strong underlying profit of £172 million – up 17% from the previous year. Its strong financial performance and prudent business model means that Nationwide is included in Global Finance magazine's Top 50 Safest Banks in the World.
Nationwide has around 700 branches and customers can manage their finances in branch, on the telephone, internet and post. The Society has around 16,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.