A survey conducted by Equifax and What Mortgage magazine and the subsequent infographic with the results have revealed that many people in the UK are unfamiliar with parts of the mortgage application process.
The February 2016 survey questioned 1,335 people, and uncovered a lack of awareness about the Financial Conduct Authority (FCA) affordability rules. These rules state that lenders have to carry out thorough checks on whether an applicant can afford to take out a mortgage.
48% of respondents were unaware of the new FCA rules, while 31% of respondents were aware of the rules but didn’t know how they affected the application. Additionally around 20% of people were unsure whether the rules would prevent homeowners from overstretching themselves financially, while 31% didn’t think the rules would affect how long the mortgage application process would take.
Aside from the affordability rules, there were also gaps in knowledge about the relationship between credit history and mortgage applications. 14% of respondents didn’t know if their ability to get a mortgage could be affected by credit issues, CCJs, previous bankruptcies, identity fraud, or their registration on the electoral roll, and 17% didn’t get a copy of their credit report before applying.
These results imply a misunderstanding about how mortgages work, and could perhaps suggest that many people in Britain are just not concerned about their ability to buy a property.
The survey also had implications about the financial situation of people in the UK – 37% of respondents were only able to save up a deposit of between 5 and 10% for their mortgage, with 16% saving less than 5%, and 12% with no deposit saved at all. It also took longer over 5 years for 15% of the respondents to save up their deposit.
See the full results of the survey on this infographic.
Mortgage Application Process – How Prepared Britons Are To Buy A Home
Infographic source: Equifax