Mortgages: What a Difference a Percentage Makes

By: Liam G

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 asses 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.

Mortgages
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Mortgages
 



Share this article :
Click to see more related articles