UK in the dark: Quarter of borrowers don’t know their mortgage rate
Homeowners in the UK are leaving themselves at risk of financial misery by failing to stay informed when it comes to their money, according to our latest research.
November 15, 2017
Homeowners in the UK are leaving themselves at risk of financial misery by failing to stay informed when it comes to their money, according to our latest research.
The research is based on a survey of more than 2000 homeowners which found more than a quarter of mortgage holders don’t know the interest rate on their mortgage while almost two thirds of adults admitted to not understanding mortgage terminology.
Spot the difference?
Among the most common areas of confusion are the differences between the base rate and short term variable rate and a tracker versus discounted rate mortgage.
Along with the confusion surrounding mortgages there was also a lack of knowledge over mortgage advice with 38% claiming they simply don’t know what it would cost for mortgage advice. Meanwhile 27% of borrowers expect advice from an independent mortgage adviser to be free although this is much lower among aspiring homeowners (17%).
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Why does it matter?
The findings come just days after the Bank of England hiked interest rates for the first time in a decade.
Paula Higgins, the Chief Executive of the HomeOwners Alliance, said: “A mortgage is likely to be the largest financial commitment you’re ever likely to make so the fact that so many people don’t actually understand the product they’re taking out is worrying to say the least. People are sleepwalking into a financial nightmare in a marketplace where rates will only rise.”
“Consumers must be able to take responsibility for their finances but in order to do this they need access to expert knowledge and guidance. It’s concerning therefore that over a third of borrowers have no idea how much financial advice from a mortgage broker should cost – clearly suggesting they have never sought it.”
“At Homeowners Alliance it has always been our goal to give power back to homeowners, buyers and sellers by equipping them with all of the information they need to navigate the housing and mortgage market. With household debt at a record high the consequences of not understanding your financial situation are very easy to see.”
“Knowing what product you’re on and when your current deal ends is critical to not ending up on a lender’s more expensive standard variable rate. If you’re in any doubt, we have fee free mortgage brokers and free expert advice covering the basics on our site.”
How do you rate your mortgage knowledge?
Despite admitting to being confused over mortgages terms and rates UK adults rate themselves highly for their ability to budget and manage their money (75% rate themselves as good).
The survey found women tend to be less confident than men in rating their knowledge of mortgage terminology despite actually having similar or better knowledge than men on a number of areas.
Higgins adds: “Our research shows women shouldn’t doubt their financial knowledge and ability and need to take control to actively manage their mortgage lending.”
For details of the full research please contact Christine Toner on 07826 857290 or email Christine@hoa.org.uk
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