Research reveals lack of knowledge among future first time buyers
Teenagers and young adults in the UK have little understanding of how much money is needed to buy a home with many thinking that they can rely on their parents to help them out in the future, new research has found.
A third of youngsters aged 11 to 14 expect to be able to borrow as much as they need, displaying a lack of understanding of how the mortgage and lending system works, according to the research from lender the Halifax.
The research also found the a third of youngster expect their parents to help them get on the housing ladder and overall young people aged 11 to 21 have a disjointed understanding of the financial commitment needed to buy a home.
Overall future first time buyers have high hopes for becoming home owners and 59% of 18 to 21 year olds feel it’s very important to own a home, but the report found a clear gap in house price outlook.
One in five aged 11 to 21 in London think they can buy a home from as little as £50,000 and up to £200,000 when in reality the average first time buyer house price in London is £422,580.
Some 23% 15 to 17 year olds believe that only rich people own their own homes, which is not surprising if a quarter of youngsters that age expect to save for 20 years towards a deposit.
Young men were more optimistic, as 23% of those aged 18 to 21 reckon a deposit of between £5,000 and £10,000 is enough to buy a home, whereas only 5% of females thought that would be enough, a bit short of the actual UK first time buyer deposit of £32,321.
Some 20% of 18 to 21 year olds are counting on inheritance to pay off their mortgage, with males being far more hopeful of a legacy clearing their mortgage than their female counterparts at 31% compared to 18% of women.
The research also found that the vast majority of 11 to 14 year olds understand what a mortgage is, but one in 10 aged 18 to 21 think stamp duty is money to pay for stamps while 15% of this age bracket also think it takes more than a year to complete a house purchase.