Should Mortgage Applications Be Simpler?
As buying a home is the most substantial commitment you will make in your life, it is no surprise that many people face challenges in arranging a mortgage and then buying the property. Saving for a deposit is a challenge, and you must also ensure you have a credit score which appeals to mortgage lenders. Given the size of commitment people make when buying a home, it shouldn’t be simple to purchase a property, but some applicants are surprised at how challenging the process.
In a study undertaken by Experian in 2018[¹], a fifth of first-time buyers stated saving money is a challenge for them. However, more than a quarter of applicants said it was the mortgage application process which was the most challenging element.
Amir Goshtai of Experian said; “Getting a mortgage is one of the biggest financial commitments many consumers will make in their lifetime, and our research shows it can be overwhelming.”
Homebuyers face additional costs when arranging a mortgage
Experian also said it is the additional costs of arranging a mortgage that is most challenging to buyers. Their report says close to one-third of buyers underestimated the cost of moving home, after they had saved a deposit of 10% of the property price.
28% of mortgage applicants said they didn’t know how much they would have to pay in legal fees, 24% were unaware of what they would pay in survey costs, 19% didn’t know how much they would pay in estate agent fees, and 15% were left in the dark over the cost of stamp duty. Of course, since then, the regulations regarding stamp duty charges for first-time buyers[²] are no longer applicable, or at least more affordable.
For buyers aged between 25 and 34 years old, a lot of these fees were surprising. 44% admitted they were unaware of these charges, which is more substantial than other age groups. One-third of respondents aged between 35 and 44 were unaware of the charges, 29% of people aged between 45 and 54 didn’t know about these charges, and 22 of people aged 55 or older were unaware of these charges.
Will mortgage applications become easier to manage?
However, with improvements in digital applications, some people in the mortgage industry believe the application process will become more straightforward in years to come. Pete Mugleston is the Managing Director of Online Mortgage Advisor[³], and he said; “I can see, in another 10 years, the mortgage application process being as simple as car insurance for many borrowers. Today, getting an appointment with the bank is tough, and brokers are handling the majority of applications. The Mortgage Market Review (MMR) has tightened regulation, and further ensured borrowers are creditworthy and able to afford their loans.”
Mortgage applications are taken seriously, and this will always be the case. However, if technological advances make the process easier, many applicants will appreciate the changes. Xpress Mortgages has a team of mortgage experts who are happy to help, so please get in touch.