First-Time Mortgage Borrowers Baffled by Industry ‘Jargon’

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A senior executive at mortgage lender Nationwide warned this week that first-time buyers are being left bamboozled and baffled by the amount of jargon used in the industry. Nationwide’s managing director for intermediary sales Ian Andrew said that confusing terms in the property and finance industries, combined with many potential borrowers lack of knowledge about the issues surrounding mortgages. Such a lack of knowledge could end up costing first-time buyers dear both in cash terms, and also in terms of making their search for a first home more stressful than it need be, Mr Andrew said, citing recent research, which found that over 40 per cent of potential and actual house-buyers find jargon involved in the process highly prevalent, confusing and off-putting. Just 31 per cent of respondents knew that LTV meant ‘loan-to-value’, which is the ratio between the size of the mortgage and the value of the property in mind, while only 14 per cent knew that negative equity meant the situation where the outstanding mortgage on a property was of greater value than the property’s value. Perhaps worst of all, only a mere 9 per cent knew that APR was the abbreviation for annual percentage rate a standard term used right across finance. We are all guilty of using jargon when speaking with colleagues, but sometimes we forget that clients may have a limited knowledge of the mortgage terms we take for granted, he said. If advisers offer an added value service and take the time to explain terminology to borrowers then they are more likely to come back to them in the future when they come to remortgage.