UK Landlord Forum / Life

An interesting little article I found here:

http://news.hotproperty.co.uk/Borrowers_do_not_understand_different_rates_18372429.html

QuoteNew research from Nationwide has found that three quarters of Britons are unable to explain the difference between a five-year fixed-rate mortgage with a rate of 5.6 per cent and one with a rate of 6.6 per cent.

The lender has revealed that 16 per cent of those aged 18 to 24 were able to work out the financial difference between the two mortgages, compared with 31 per cent of those aged 55 to 64.

Those in the south-east, Midlands and Scotland had the highest regional scores, while those in Wales and the south-west performed most poorly.

"People's lives are busier than ever in the run up to the festive season and, as a result, they may be less inclined to shop around for the best deal," said Matthew Carter, divisional director for mortgages at Nationwide.

"The temptation may be to take a slightly higher rate as an easier, less hassle option. But, as our research shows, most people don't understand the impact that just a one per cent difference can make, meaning they could be wasting thousands of pounds," Mr Carter added.

The study comes just a few weeks after mform.co.uk revealed that a significant proportion of Britons have never changed mortgage lenders.

3/4 is a lot of peeeeeeeeepalz   

That probably explains why a lot of people are getting repossessed. Understanding rate of interest is a fundamental. I've always said that the reason why the majority of FTB's lose their homes is because they picked the wrong mortgage.

They'll probably in for a bigger shock when the fixed rate period changes to the variable rate.

Its the lenders fault to a degree, as they bamboozle the customer with the packages, once there was three to choose from, now there are still the same three but in many more guises,
Fixed rate in this day and age is a nightmare, as peeps are lent up to the hilt anyway and as you say when the lift happens they find they are infact paying out more.
Most people find money and mortgages hard to gage,
I think the attitude is if i am told i can afford it then i am ok.

see because real estate is all about buying and selling property, and there is potential for growth in value, and loss in return, one is required to be on top of their game at all times. I don't indulge in this form of business as much as my husband but even I know the difference 1 % can make with paying mortgage. I think it's silly for people to get involved in any business or form of investment without knowing the do's and don'ts  and obvious details...

3/4s is just too freakn' much.

I don't really understand how people could not understand this, especially given that all mortgage lenders are obliged to give you this full print out these days with your total cost of borrowing and all that.

There's some complexity, but the key is to weigh up the total cost of borrowing over the life of the loan alongside conditions like the length of your fixed rate period (which is where the judgement call comes in - when do you think the market will change, is your fixed rate long enough - its essentially finger-in-the-air). I had some fee-free option I think if I went for a slightly different rate, but over the full term of the loan you paid more that way so I didn't take it.

How tough can it be? Higher = bad, lower = good, and always check the total cost of borrowing. They do the maths for you.


V

As i said i think its the, * i can afford it cus i was told i can * attitude that most people go on.  Dont forget money scares the bejeeesus out of most