Consumers 'Should Review' Mortgage Deals

Not shopping around for a competitive mortgage deal could be placing unnecessary financial strain on millions of homeowners, new research shows.

In a study by Abbey Mortgages, it was suggested that a failure to not get the most cost-effective deal available is setting Britons back by an average of 5 pounds every day or a nationwide collective of 25 million pounds. The financial services firm went on to claim that if homeowners placed this 5 pounds into making overpayments on their mortgage then they could reduce the amount of time they pay back their borrowing up to by six years, saving a total of38,432 pounds. It was indicated that an estimated five million Britons are aware that they are not on the best mortgage offer that they can find, as 8.3 million people (just under half of the entire homeowning population) claim that they do regularly check their deal.

In sticking with an uncompetitive mortgage deal, it is possible that consumers may develop problems with meeting the other regular demands that their spending comes under, for example personal loan payments, credit and store cards, utility bills and overdrafts.

Commenting on the figures, Nici Audhlam-Gardiner, head of mortgages for Abbey, said: "5 pounds a day or 140 pounds a month on average is not an insignificant amount of money and we know for a fact that 5 million people could benefit immediately by shopping around."

Further research from the bank, which is the third largest lender in Britain, also showed that women are more likely to not bother checking their mortgage deal. About half (49 per cent) of females report that they fail to undertake a regular review of such a financial product, in comparison to 46 per cent of men. Meanwhile, 31 per cent of women claim that they know their deal is not the best, some five percentage points higher than the 26 per cent of men recorded who are aware of this.

Abbey also indicated that younger homeowners are most proactive when it comes to reviewing their mortgage deal. Just over a third (35 per cent) of those between the ages of 24 and 35 'bury their heads in the sand' when analysing such a product, in comparison to 64 per cent of 55 to 64-year-olds. Older people are also more likely to have the most uncompetitive offers on the market. However, it was revealed that the loans they owe are smaller in average size in comparison to people from other age groups.

In having one of the more expensive mortgage deals around, it could be possible that homeowners find that they struggle to pay off loans, credit cards and other types of borrowing. However, for those who are concerned about their capacity to meet repayments, even after they switch to a better deal, applying for a cheap loan now could provide a means of helping to manage their money. Such a loan may be of assistance to an increasing number of people, as a recent Nationwide consumer confidence study indicated that the country's financial outlook dropped to 85 in December - the lowest score recorded since February last year. It was suggested that petrol and food price increases are impacting upon Britons' fiscal optimism. Those worried about meeting such demands could find that a quick loan provides effective help with finance.

By: Tom Dawson