More than 5 million people in Britain have no idea how much their mortgage is costing them, according to research released today by habito, the world’s only digital mortgage broker.
With 7.6 million active mortgages in Britain, the study found one-third (33%) of UK mortgage holders don’t know what interest rate they are paying – despite it being one of the biggest financial commitments that most Brits have. The research has exposed the widespread lack of knowledge among homeowners over the basic details of their mortgage, potentially caused by the complexity and hassle of the mortgage application process, and a reluctance to manage mortgages effectively over the long-term. This is estimated to cost consumers £29 billion a year.
The research also revealed of the mortgage owners surveyed:
- One in eight (over 1.8 million mortgage holders) don’t know if they have an interest only mortgage;
- Almost one in ten (over 1.4 million mortgage holders) don’t know if their mortgage is a fixed or variable rate;
- Almost one in ten (over 1.3 million mortgage holders) don’t know how long their mortgage term is;
- One in every 20 mortgage holders (over 700,000 mortgage holders) cannot even name their lender
Mortgage holders in Wales are the savviest in UK when it comes to knowing what interest rate they are paying on their mortgage, with far more people in the region (79%) knowing this than in other areas of UK. That compares to just 65% of mortgage holders in London and 63% in the South East, where house prices are often higher. The research also revealed a stark gender gap. Less than two-third of women (61%) know how much interest they pay on their mortgage, which rises to almost three quarters (73%) among men.
Daniel Hegarty, CEO of habito, said: “For most people, a mortgage is the biggest financial commitment of their lives, yet the application process is opaque, slow and untouched by technology. It’s no wonder there is such a widespread lack of awareness among existing mortgage holders and such reluctance to manage their mortgages over the long-term. Applying for a mortgage with a traditional broker is stressful and confusing – people just want it to be over as quickly as possible and then forget about it.