A lack of understanding over the differences between the main types of mortgage could mean borrowers are missing out on the most suitable mortgage deal for their circumstances.
New research from first direct has found that 92% of people planning to take out a mortgage in the next 12 months did not completely understand the range of mortgage deals on offer.
Around one in ten people (11%) said they did not understand mortgages at all, while only around a quarter of people (26%) who already have a mortgage in place felt they completely understood the products.
Fixed rate mortgages give you the security of knowing exactly what your repayments will be over the fixed rate period.
So, for example, Yorkshire Building Society's Two Year Fixed Rate Mortgage at 2.89% means borrowers will pay this rate for two years.
However, if interest rates fall, you could end up paying more on a fixed rate mortgage than on a variable rate mortgage.
A tracker rate mortgage involves the interest rate being set at an agreed percentage above the Bank of England base rate.
First direct, for instance, offers a tracker mortgage for the term of the loan which currently has a rate of 2.59%, but will vary as the base rate rises and falls.
A standard variable rate, on the other hand, does not track the base rate. Instead, it varies over the term of the mortgage and will be set internally by the provider of the mortgage.
"It's really important that people do their research into which is the best mortgage product for them, taking into consideration their stage in life and current financial circumstance," said Richard Tolchard, senior product manager at first direct.
"They should always try to compare like for like and bear in mind that fees can play a large part in how a mortgage stacks up against the competition."
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