26% of homeowners select the first available mortgage when it comes to selecting a mortgage offer and does not shop around for the best deal for their financial circumstances, according to Noddle research.
Over a third said they knew very little of how mortgages worked and nearly one in five are trapped in a financial contract and now regret choosing it.
Even though buying a house is one of life’s biggest investments, Brits spend 3.6 days doing their research for mortgages which is less than a holiday (five days) or even a car (six days).
Noddle says that borrowers are taking a risk by taking what’s on offer from the first mortgage provider they speak to but believe consumers won’t necessarily be getting a bad deal – but it certainly is a gamble either way.
Consumers taking up a typical £200,000 mortgage on two-year fixed deals from main high street banks can be offered rates that vary from 1.84% to 4.22% (for those with a product fee of £995) – resulting in an additional £3,000 a year difference.
Research indicated that Brits didn’t spend time researching mortgage companies because they were worried about their credit scores. 23% said they took the first mortgage they were accepted for because they were concerned if they applied for other offers it would harm their score and were possibly putting themselves in danger of not getting an offer at all.
Jacqueline Dewey, managing director at Noddle, said: “The excitement of finding a house you’ve fallen in love with, combined with worries about being accepted for a mortgage, means it can be easy to rush a decision about a mortgage.
“But when we’re talking about thousands of pounds on the line it really does pay to do your research. Rates vary across the market so don’t take the first deal available and try to speak to more than one lender. Understanding your credit score and getting it in good shape beforehand will also help you get the best rates.”
Kevin Roberts, director at Legal & General Mortgage Club, commented: “There’s no denying that the mortgage process is tedious. Perhaps, this is why consumers spend so little time searching for a mortgage and instead leave the legwork to a mortgage broker who can help buyers find a great deal. As well as providing invaluable advice on the thousands of products available in the market, they also help to make the process as smooth and as efficient as possible for consumers.
“Our Value of a Broker research found that a third of those who used a broker said it removed the hassle of filling out forms and applications – so it’s no wonder that savvy borrowers are taking advantage of their services and focusing their efforts on finding their dream home, holiday or car instead.”