Nationwide Building Society says a lack of knowledge about mortgages could end up costing borrowers money and is adding to the challenges of buying a first home.

According to new research, the Nationwide said that over 40% of people who have looked into buying a house say that jargon confuses them. First-time buyers are the most likely to be left baffled due to their lack of knowledge.

31% of those surveyed knew that LTV means loan to value and refers to the ratio between the size of the loan they wish to borrow and the value of the house they want to buy. 9% did not know that APR stands for annual percentage rate.

14% of people did not know that negative equity means when the value of the mortgage, which is outstanding on the property, is more than the market value of the property.

25% of people did not know that they become the owner of the property once the sale is completed, with some believing it was when the offer is accepted, or when they had exchanged contracts. 47% of those surveyed knew that it’s obligatory to survey the house they are looking to buy if they need a mortgage.

Martyn Dyson, Nationwide’s head of mortgages, said: “Buying a property is likely to be the biggest financial commitment most people will make. A lack of understanding of the key terms used during the mortgage process could mean that people end up spending more money than is necessary.