From base rate to APRC, there’s a lot of mortgage terminology which those applying for this type of loan may hear fairly regularly during the process. New research into common mortgage jargon has highlighted the extent of the nation’s knowledge about what these terms actually mean. Online mortgage broker Trussle asked 2,002 homeowners and house-buyers about their understanding of these words and processes. But, it was one term in particular which stood out as “worrying” for one mortgage expert.

According to the research 76 per cent of people couldn’t correctly define the word remortgaging.

Remortgaging is the process of switching a mortgage deal, often done to avoid lapsing onto the current lender’s Standard Variable Rate (SVR).

In fact, just one in four people asked (24 per cent) admitted they knew what it meant, Trussle said.

When a mortgage deal ends, borrowers can be moved onto the lender’s SVR.

The Money Advice Service points out that while it’s not always worth switching mortgage, a disadvantage of this rate is that the Standard Variable Rate can be changed at any time during the loan.

According to Trussle’s February 2018 Mortgage Saver Review, moving onto the SVR could see a borrower risk losing an average of £4,500 per year.

Commenting on the research, Dilpreet Bhagrath, Mortgage Expert at Trussle said: “Mortgage terminology can be tricky to understand, and it’s clear that there’s still a lot of jargon in the industry that’s misunderstood.

“Buying a home is one of the biggest emotional and financial commitments someone will make in their lifetime.

“Yet, borrowers are being put at a huge disadvantage by not truly understanding the terminology used in their mortgage agreement.

“It’s worrying that so many homeowners still don’t understand remortgaging, particularly as they risk falling onto an expensive Standard Variable Rate and could waste an average of £4,500 a year on high-interest rates.

“Across the industry, we need to educate borrowers so they understand what they’re getting into and how they can keep their mortgage on track.

“At Trussle, we’re calling for a Mortgage Switch Guarantee to make mortgages more transparent across the board.

“We hope that this will increase transparency so mortgage borrowers are treated fairly and have the tools they need to make the right financial decisions.”

The research also showed that 64 per cent of those asked couldn’t correctly define the term APRC, with only 40 per cent able to explain what completion is.

While some people will already have a mortgage and be considering whether remortgaging is the right option for them, others may be looking to apply for the loan.

READ MORE: Mortgage for over 65 age group – can pensioners get a mortgage during their retirement?

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