According to a report from Zoopla, which surveyed around 2,055 people, 27% said that this property knowledge gap had put them off buying a home.
A fifth said that they cannot confidently describe a mortgage, and one in 10 said they do not understand any of the 25 key terms related to homebuying.
For instance, a quarter said that they could not accurately identify the difference between a fixed rate, interest-only and an offset mortgage, and only 43% could correctly identify an interest-only mortgage.
Only 10% of those surveyed knew what gazundering was, which is when a buyer lowers their original offer just before contracts are exchanged, and was the least well-known term.
The next least known was disbursements at 15%, which are the payments or taxes that need to be made to a third party by your solicitor as part of the homebuying process, followed by buying schemes and covenant at 17%.
A covenant for a loan is when a condition in a commercial loan or bond issue that requires the borrower to fulfil certain conditions or limits certain actions.
Over half said that they could not describe words like completion, lease or stamp duty.
Regarding stamp duty, only 27% could accurately identify that it must be paid within 14 days of the date of completion, and only 45% could confidently describe it.
A fifth also thought that you can never avoid paying stamp duty, when in England it only applies to homes over £250,000 and rises to £425,000 for first-time buyers on homes costing up to £625,000.
Around 90% could not describe more than half of the mortgage schemes like shared ownership, mortgage guarantee scheme or Lifetime ISA, showing that many homeowners could be missing out on an opportunity to get them onto the property ladder.
Parents owning a home key factor in property knowledge gap
Whether or not someone’s parent owns a property has a key influence on their understanding or knowledge of the homebuying process.
Of those whose parents are not homeowners, 14% said they did not know what a fixed rate mortgage was, compared to 6% of those whose parents do own a home.
Adults are a third more likely to own a home if their parents are homeowners, at 72%, which could be partially down to knowledge and advice given, although financial support could also play a factor.
Of those whose parents owned a home, 4% receive advice, compared to 14% of those whose parents do not own a home.
Around 82% of UK adults who own a home admit to finding the process complicated and hard, with less than one in five saying they felt confident throughout.
Daniel Copley, consumer expert at Zoopla, said: “The research shows that many UK adults – including those who already own a home – have a significant lack of knowledge when it comes to what even the most basic and commonplace homebuying terms mean.
“It’s usually presumed that finances are the reason someone doesn’t own their own home, but the figures show that for millions of people, it could also be a lack of knowledge that is holding them back.”
He continued: “To help would-be buyers make the most informed decision they can when it comes to buying a home and arm them with the key knowledge, our step-by-step guides offer prospective homeowners all the key information they need to confidently embark on their homeowning journey.
“They cover elements such as what to budget for, how to speak the language of the property market and what to look out for during the process.”
