A Quarter of Mortgage Holders could be sleep-walking into a financial nightmare!
According to the results of a recent survey carried out by over 2,000 people by the campaign group Homeowners Alliance, some 27% of those surveyed admitted that they did not know what rate they were on.
Nearly two-thirds (64%) of adults admitted that their understanding of mortgage terminology was "not good", while more than half (55%) said the same about their awareness of different mortgage products. Some 69% of women rated their understanding of mortgage terminology as "not good" compared with 58% of those men surveyed.
These findings were released after the Bank of England base rate was increased earlier this month for the first time in over 10 years, meaning millions of variable rate mortgage holders face higher costs.
Women were more likely to give a correct definition of the term fixed-rate mortgage which is when an interest rate is set for an agreed period of time such as two, three, five or ten years. They were also more than likely to give a correct definition of the term negative equity which is when the size of someone's mortgage debt outweighs the current value of their home and an arrangement fee which is a type of mortgage charge.
Men appeared to have a better understanding than women when it came to some different types of mortgage as well as the concept of loan-to-value or how much a home owner borrows in relation to the value of the property.
What should I do?
Lets put this out there – a mortgage document is likely to be the most important financial document you will ever sign. Don’t you think you should take some time to actually understand it?
It is imperative that individuals check their mortgage paperwork to determine and understand the agreements they have with their banks, and also the likely impact on their monthly income should their mortgage payments increase. A mortgage is likely to be the largest financial commitment you're ever likely to make. 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. Too often too many people take the ostrich approach to these kinds of matters, which are far too serious to ignore as a potential impact of an expensive mortgage rate may result in you no longer being able to afford the mortgage payments meaning you may lose your property.
ASK FOR HELP - Try not to wait any longer, if you have a financial issue, or are concerned about any of the matters mentioned in this piece, simply ASK FOR HELP NOW.
What we can do to help?
Since 2010, GDP Equity Experts have helped 100’s of families deal with debt related issues and in particular property debt related issues. We would be very concerned at this point as we know over 600,000 people are currently living in negative equity right across the UK and N Ireland, and many are already struggling month to month to keep up with their mortgage payments. Therefore, this poor understanding of mortgage terminology could be detrimental to a lot of households.
As a result, it is very important to take advice in this regard from a regulated team of debt advisors to plan for the future.
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