As many as one in three UK homeowners do not know what mortgage rate they are on, potentially costing them thousands of pounds each year, according to new research from consumer group Which?
Only three in ten (28 per cent) homeowners in Scotland knew their exact mortgage rate, with nearly four in ten (37 per cent) knowing the approximate rate.
Which? Mortgage Advisers, who surveyed more than 3,500 homeowners across the country, revealed borrowers with an average-priced home could end up paying as much as £347 a month – more than £4,000 a year – more on their lender’s standard variable rate (SVR).
Researchers said there was a “clear level of apathy” over mortgage deals. Four in ten (41 per cent) of those on SVR explained they would be unlikely to switch if they came across a cheaper deal today.
Those most financially informed were Londoners and 18 to 24-year-olds when it came to knowing their mortgage rate.
Eighty per cent and 74 per cent respectively knew the exact or approximate figure respectively.
Homeowners in Wales were the least likely to know their mortgage rate, with just one in five (18 per cent) knowing the exact figure and four in ten (40 per cent) knowing the approximate figure.
Of those on SVR who had been on the same mortgage for at least the past five years, when asked why they had not switched one in five (22 per cent) said it was not worth the effort. One in seven (15 per cent) claimed they had not thought about it.
David Blake, principal at Which? Mortgage Advisers, said customers needed to be pro-active about their finances.
“I would urge anyone with a mortgage to check what interest rate you’re on and whether you’re paying more than you need to,” he said. “The remortgage market is highly competitive at the moment, so there’s a good chance that remortgaging will save you money.”
One in four (25 per cent) of those who took part in the survey were on their mortgage lender’s SVR, usually costing more than other products available from the same provider.
The survey showed 55 per cent of homeowners were on fixed rates, 10 per cent on trackers and 5 per cent on discount rates. Gerry MacDonald, an Edinburgh-based independent mortgage financial adviser, said people should get regular “money health check-ups”.
“The majority of people leave it until they are really struggling to stretch their pay packets before they think of going to speak to their own mortgage adviser about the problem,” he said.
“However, independent advice is the better option and equips them with the financial literacy they need now.””