Research carried out by First Direct revealed that only 8% are confident that they grasp how the different major mortgage types work, while 11% confess that they don’t understand mortgages at all.
Worryingly, only 26% of existing mortgage borrowers said they completely understood how the main types of mortgages work.
First Direct asked more than 2,000 respondents whether they understood the difference between fixed rates, variable deals and tracker mortgages.
On average, 22% completely grasped the difference. The greatest understanding was displayed by those in the East of England and Yorkshire (26%), while only 18% of those living in the East Midlands and Wales got it.
The research also concluded that men are more likely to appreciate the difference between types of mortgage deal than women, at 26% compared to 18%.
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.”
