According to the Pepper Money Specialist Lending Study, 32% of people do not know how much of a deposit they will need to buy their own home, while a further 32% think they need a deposit of 20% or more.
Pepper Money said this misconception was a “hurdle” to potential homeowners. The study also found that 32% of respondents believed raising a deposit was the biggest barrier to homeownership.
Some 69% of people who do not currently own a home said they wanted to in the future, but 22% felt it would take more than five years for them to be able to afford it. A further 36% believed they will never be in a financial position to become a homeowner.
Ryan Brailsford, director of business development at Pepper Money, said: “The Pepper Money Specialist Lending Study surveyed a demographically representative sample of more than 4,000 British adults and has uncovered several misconceptions amongst the population. With nearly two-thirds of potential first-time buyers unaware of the size of deposit they would need, or think they need to save at least 20% of the value of their first home, it’s clear that there are thousands of hopeful homeowners out there who have written off their immediate chances to take a first step onto the housing ladder even though they may be in a position to do so.”
Brailsford added: “At Pepper Money, we support schemes like shared ownership, Right to Buy and First Homes as part of our affordable homeownership proposition. This range enables first-time buyers the opportunity to become homeowners with low deposits and are supported by a human approach to underwriting.
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“The message to brokers is clear – there are customers out there who need your professional advice to help them achieve their homeownership goals and, with lenders like Pepper Money, there are options available to them, even if they miss out on a mortgage from a high street lender.”
Zara Bray (pictured), head of strategic accounts at Legal and General, said: “Homeownership in the UK is still desirable and brokers play an important role in helping customers to achieve those dreams. This research highlights an opportunity to help thousands more customers who are currently writing off their chances of buying their first home. I believe the industry can do more to educate the public about the options available to them.
“Lender innovation is key, together with brokers who can market those products, criteria, and services to their customer base in order to elevate the opportunities available to first-time buyers. These efforts will help, not only to raise awareness and understanding amongst customers, but it will also help brokers to grow their business.”
