Liam G asked:


A recent survey carried out by Nationwide Building Society found that a staggering three quarters of UK residents are unaware of just how significant 1% can be in relation to their mortgages repayments.

Nationwide based its figures on a five-year fixed-rate mortgage deal. The outcome was that just a 1 percentage difference in interest rate could affect the cost of the mortgages by more than £4,000.

The survey focused on two five-year fixed-rate mortgages, both for £120,000. The first was at a rate of 5.6% and the second, 6.6%.

It found that the biggest proportion of those questioned (28%) thought that the difference between the two would be about £500 to £2,000.

Some 23% did not have any idea what difference it would make and a quarter correctly identified the difference to be around £4,000.

In addition, Nationwide found that male respondents were more likely to give an accurate estimate than women, with figures 33% and 18% respectively.

Age-wise, the survey found that younger respondents had less of an idea than their elders, with 31% of 55 to 64-year-olds answering correctly, compared to just 16% of the 18 to 24-year-old age group.

Nationwide’s findings show just how many people don’t understand how much difference that a 1% difference in mortgage rates could make, and subsequently, how much money could potentially be wasted by UK homeowners.

The situation is likely to worsen in the run-up to Christmas, as people’s lives become busier. They will be less inclined to shop around for the best mortgage rate.

As is the case with any long-term line of credit, it is always best to thoroughly ***** your current financial situation, taking into consideration any unexpected changes before submitting an application.

In summary, if you’re in the market for a mortgage, then taking the time to shop around and comparing the total cost for the duration of the mortgage is strongly advisable.



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