Mortgage confusion means people may miss out

92% of people planning to take a mortgage in the next 12 months don't completely understand the difference between the main types of mortgage, say First direct.

Related topics:  Mortgages
Millie Dyson
14th September 2010
Mortgages
A new survey by first direct has revealed that on average, amongst those who plan to take out a mortgage in the next 12 months, only 8% said they completely understood the difference between the types of mortgage on offer and 11% said they didn't understand at all.  

Staggeringly the survey also highlighted that only 26% of people who already have a mortgage feel they completely understand the difference.

Fixed rate mortgages give the security of knowing what you'll be paying over the fixed rate period. However, if rates fall you could pay more on a fixed rate mortgage than you would on a variable rate mortgage.

With a tracker rate mortgage, the interest rate is set at an agreed percentage above the Bank of England Base Rate. The interest rate will rise and fall in line with changes to the Bank of England Base Rate.

A Standard Variable Rate will vary over the term of the mortgage and is a variable rate set internally by the mortgage provider. The Standard Variable Rate does not track the Bank of England Base Rate.

Richard Tolchard, Senior Mortgage Product Manager at first direct commented:

"This highlights a worrying trend. It's really important that people do their research into which is the best mortgage product for them, taking into consideration their stage in life and current financial circumstances.

"They should always try to compare like for like and bear in mind that fees can play a large part in how a mortgage stacks up against the competition."
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