As many as two-thirds of homebuyers and movers are confused by the technical mortgage terminology used by mortgage lenders and brokers.
A survey by independent mortgage brokers Trussle has revealed that fewer than half of us read our mortgage agreement before signing up to borrow hundreds of thousands of pounds.
Even those of us who already own properties admit that we do not always understand what remortgage means.
A remortgage is when you change mortgage lender but do not move house. When asked, only one in four people were able to explain that.
Trussle commissioned 4Media to survey 2,002 UK homeowners and those currently buying a home to ask them to reveal the depth of their knowledge about mortgages and the mortgage terminology used by lenders in their paperwork.
Common words used by lenders that confused applicants included completion – 40 per cent didn’t know that meant the deal was completed.
More than a third of people surveyed did not know that a mortgage term is the length of time the mortgage runs for.
More than a quarter had no idea what a base rate was. The base rate is what the Bank of England charges banks and mortgage lenders when they borrow money, this is used to set the interest rate charged for by mortgage lenders.
The importance of understanding mortgage terminology is important as failure to clarify any uncertainties could be an expensive lesson.
If you are considering buying a property or switching lenders, it is essential that you seek legal advice on your financial obligations and the terms of your mortgage offer.