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Getting that first mortgage, allowing you to take your first step onto the property ladder, is a momentous occasion. Given the size and importance of such a loan, you'd think people would spend considerable time choosing the right one. However, research from Noddle shows that people spend more time searching for a holiday than picking a mortgage.
Indeed, according to their findings, consumers spend an average of five days on holiday research and six days on choosing the right car, but only 3.6 days on their mortgage – almost the same amount of time people spend on picking an outfit for a special occasion (2.9 days). Even more concerning, 26% said they pick the first available mortgage, which could be a costly mistake to make.
While your first offer may not necessarily be a bad deal, statistics show that rates on two-year fixed mortgage deals vary from 1.84% to 4.22% among high street banks (looking at those with a £995 product fee; as at 28.06.18). This means that a borrower could be £3,000 a year worse off (on a typical mortgage of £200,000) if they get the worst instead of the best rate.
Lack of knowledge seems to be a major reason for the lack of research, with 36% claiming they know little to nothing about mortgages, spending less time comparing products as a result. Unfortunately, not doing your homework has caused 17% to find themselves stuck in a financial contract they're not happy with – and with early repayment charges on some mortgages being quite steep, this could be a costly mistake to rectify once it's too late.
"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," Jacqueline Dewey, managing director at Noddle, said. "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."
If a lack of knowledge is preventing you from getting the best mortgage deal, we have several guides that may be able to help. If, on the other hand, you know enough to recognise a good deal but aren't sure where to start looking, try our Best Buys.
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