Homeowners clueless about the interest on their mortgage

The vast majority of UK homeowners are in the dark about how much interest they are paying on their mortgage, new findings reveal.

A nationwide survey of 2,000 homeowners by Sprive, which helps homeowners save money on their mortgage, reveals that 74 per cent of those who own their own home massively underestimate how much interest they will be paying on their mortgage over its lifetime.

In an age where many people are scrutinising their everyday bills, and finding ways to save money and cut down spending, mortgage interest is the elephant in the room that many just accept as the norm and don’t do anything about it. 

From the research: energy bill comparisons, everyday shopping bills, and phone/tv subscriptions, it seems, are taking budgeting precedence behind the closed doors of home, in a bid to bring down household expenditure, with mortgage interest coming ninth on the list of ways to reduce costs.

John Tarazi from Echo Finance, comments: “As well as being able to reduce the amount of interest you pay on your mortgage and clear your mortgage debt more quickly, making overpayments could save you much more money than you earn from your savings unless the interest rate on your savings account (after tax) is higher than your mortgage rate.”

Sprive CEO Jinesh Vohra says: “We know that the rising cost of living is having a huge impact on people’s spending and savings habits and people are looking for ways to make quick fixes to help them improve their finances. 

“It’s worrying that our research revealed just what we feared; that people know that they have interest to pay on their mortgage but finding ways of paying their lender less interest isn’t something that many people think about. 

"The amount of interest homeowners pay over the lifetime of the mortgage is already eye watering and unfortunately with rising rates, many homeowners will likely end up paying more than double the interest they’re currently forecasted to pay."