Three quarters of homeowners unable to correctly define ‘remortgaging’

The majority (61%) of current and soon-to-be homeowners in the UK don’t fully review their mortgage agreement before signing it, and 50% claim they only understand some of the language used in paperwork associated with the house buying process.

That is according to new research and an interactive visual map by Trussle. The online mortgage broker spoke to 2,002 homeowners and those in the process of buying a home about their understanding of common mortgage jargon.

It revealed the true extent of the nation’s knowledge, to discover what lenders could be doing to better inform them.

Some 66% of respondents admitted they don’t understand all of the terminology used in their mortgage agreement. The term ‘remortgaging’ was lost on 76% of homeowners, alongside ‘APRC’ (64%), ‘completion’ (40%), ‘mortgage term’ (37%) and ‘base rate’ (27%).

The research highlights that there are some key mortgage terms which current homeowners or those in the process of buying a home do have a clear understanding of, such as ‘overpayments’ (81%), ‘credit report’ (80%), ‘SVR’ (76%), ‘arrears’ (75%) and buy-to-let (74%).

Shockingly, 58% of people Trussle spoke to didn’t know they’d be charged for missing a payment on their mortgage, suggesting that the industry isn’t doing enough to educate and guide borrowers through the whole mortgage process and associated fees.

“Mortgage terminology can be tricky to understand, and it’s clear that there’s still a lot of jargon in the industry that’s misunderstood,” Dilpreet Bhagrath, mortgage expert at Trussle, said.

“Buying a home is one of the biggest emotional and financial commitments someone will make in their lifetime. Yet, borrowers are being put at a huge disadvantage by not truly understanding the terminology used in their mortgage agreement.”

She added: “It’s worrying that so many homeowners still don’t understand remortgaging, particularly as they risk falling onto an expensive Standard Variable Rate and could waste an average of £4,500 a year on high-interest rates.”

“Across the industry, we need to educate borrowers so they understand what they’re getting into and how they can keep their mortgage on track.”