According to new research by Halifax, the UK's leading mortgage lender to first time buyers, only a third of those new to the property ladder are aware that the acronym KFI stands for Key Facts Illustration.
A recent study by Halifax into first time buyer affordability shows that the house price to earnings ratio - a key affordability measure - has improved significantly over the past 18 months. With first time buyer affordability at its lowest level for more than five years, Halifax offers them help to better understand financial terminology and mortgage jargon.
Key findings:
A third of first time buyers are unsure of KFI definition - A Key Facts Illustration (KFI) requires all lenders to set out the details of a mortgage product in the same format, so it's easier for customers to compare mortgages. Despite this design, it seems the commonly used acronym KFI has left many first time buyers confused. Popular definitions proposed by first time buyers included Key Facts Instrument, Knowledge Facts Information and Knowledge For Improvement with 5%, 24% and 4% respectively.
Majority can correctly define completion date - Four out of five first time buyers (81%) correctly defined the term "completion date" as the day ownership of the property is transferred and you become the legal owner. Despite being known as "settlement" in Scotland, 87% of first time buyers in Scotland knew the definition for completion date.
35 to 44 years olds have the best understanding of "gazumping" - The term "gazumping" popularised in the housing boom in 1980s was best defined by 35 - 44 year olds, with 86% correctly identifying the phrase. Unsurprisingly, only half of those who were toddlers or younger in that decade (18 - 24 year olds) were able to define the term as "your offer on a property is accepted but then subsequently turned down because a higher offer is placed by another potential buyer."
First Time Buyer Choices
Halifax is committed to helping the first time buyer market. Halifax's exclusive First Time Buyer Choices range offers a menu of features designed to cut the cost of buying a home. First time buyers can choose from a five year fixed rate mortgage, with any one, two or all three 'extras' from the following: £500 cashback, refund of the cost of Halifax valuation fee and/or no conveyancing fees paid.
Impartial website
Halifax has a dedicated website http://www.buyingyourfirsthome.co.uk/, which gives first time buyers a helping hand getting onto the housing ladder. The key features of the impartial website include:
Jargon Buster: a helpful A to Z of the key words and phrases in the homebuying process and what they all mean.
Affordability Calculator: first time buyers can use the online calculator to find out how much they can afford to borrow.
Interactive To Do List: helping first time buyers to track their progress as they buy their first home
Viewing and Moving Checklist: practical, printable forms to use as a guide when viewing properties and moving home.
Jaedon Green head of mortgage development, at Halifax said: "Understanding mortgage jargon can be difficult for many first time buyers who are new to the housing market. Our experience shows they need a combination of advice, expert knowledge and mortgage deals which help make the first steps on the property ladder easier."
