Almost two-fifths of young people in Scotland cannot explain how a mortgage works, according to a Bank of Scotland survey.

The lender says 39% of 18 to 34-year-olds are unable to “confidently” sketch out the home loan process, with a quarter of them admitting a lack of knowledge is a “key barrier” to owning a house or flat.

Young Scots said the greatest obstacles to getting onto the housing ladder remains affordability,73%, saving for a deposit, 62%, and finding a suitable property, 34%.

Currently, around half of this group either rent from a private landlord, 34%, or live with their parents, 16%, while 21% have a mortgage. 

Fewer than a quarter, or 23%, of those living with their parents are doing so through choice, while three-quarters of young Scots live in the family home because they cannot to afford to move out. 

Younger Scots who plan to get a foot on the property ladder, believe they will be able to do this by the time they are 31 – slightly longer than the current average age of Scotland’s first-time buyers of 30, according to Halifax data.

Some of the nation’s young adults anticipate their homeownership ambitions will be boosted by inheritance, with 34% expecting to receive an inheritance in the future, with half of this group saying they will spend this cash on a property. 

However, 11% of young Scots believe they will never be in a position to afford their own home. 

Bank of Scotland director Ricky Diggins says: “Young people in Scotland who want to realise their home-owning dreams continue to be affected by issues around affordability and availability of properties.

“Our survey shows that a third of adults under 34 are struggling to find a property that’s right for them and a sixth continue to live in the family home whilst they save for their next step. 

“Our research also revealed that young Scots don’t feel financially confident when it comes to understanding how mortgages work, feeling this knowledge gap is impeding their progress onto the housing ladder. 

“Asking friends and family members to share their experiences is a great way to increase confidence, and getting in touch with your bank to discuss the basic steps, will help demystify the process.” 

The lender commissioned pollster YouGov to survey 2,109 adults online between 18 and 34 in Scotland between 17 May and 8 June.