Some contractor mortgage holders do not know whether they are on a fixed rate or variable rate mortgage, according to the Consumer Financial Education Body.
New research shows that 1 in 7 people with a mortgage don’t know what the interest rate is on their housing loan, or whether the rate is fixed, standard variable or tracker. And about 1.3 million people (15%) do not know when their current deal comes to an end.
This lack of knowledge could leave house buyers in the risky situation of ignoring the need to review their mortgage needs.
The chief executive of the CFEB, Tony Hobman, pointed out that we have seen record low interest rates for some time now. But this situation will eventually change and their research shows that many people haven’t considered the consequences of a rise in interest rates.
To encourage home buyers to keep on top of their financial situation, the body has launched a campaign called “Stay on top of your mortgage”.
The campaign aims to offer help and advice on the consequences of changing interest rates and changes in personal circumstances. It advises mortgage holders to check their paperwork and find out what their current interest rate is and when the deal finishes. Home owners are also advised to use a mortgage calculator to work out what the impact of an increase in interest rates would have on their monthly repayments and the knock-on effect that rise would have on the monthly disposable budget.
Meanwhile, the average rate for a mortgage with a two-year fixed rate has fallen to its lowest level since the Bank of England began publishing data in 1995. In May the rate for a mortgage with a 75% LTV ratio stood at 3.78% and that rate dropped to 3.67% last month.
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Image: Day 14: I Don’t Know ANY of This! by Lourdes Nightingale
