One in 10 first-time buyers reduced to tears when taking out a mortgage

Taking out a mortgage is so stressful that it is reducing one in 10 first-time buyers to tears, new research shows.

According to online mortgage broker Trussle, 23% of applicants were also forced to take time off work to make arrangements for their first mortgage.

The study of 2,000 homeowners revealed that one in four borrowers reporting that they found the experience to be stressful, while 5% felt compelled to complain to their lender or broker about the service they received.

The negative experience so often associated with securing a mortgage is also leading to inertia among current borrowers. One in 10 (9%) respondents, the equivalent of a million people, said they have been discouraged from switching mortgage by their experience of being a first-time buyer, while for 13%, it’s actually discouraged them from moving home.

This switching inertia is costing UK homeowners billions of pounds every year. There are roughly two million borrowers in the UK on a standard variable rate mortgage when they don’t need to be, and most will have slipped onto a standard variable rate because they failed to switch when their initial term ended.

A borrower on a standard variable rate will almost always pay a higher rate of interest than they would on a competitive deal.

Trussle has calculated that the average UK borrower on an standard variable rate pays £4,900 more in annual interest than they would on the lowest-rate deal on the market – equating to £9.8billion in excessive interest being paid by inert mortgage borrowers on standard variable rates each year.

Ishaan Malhi, CEO and founder of Trussle, said: “Buying a home is one of the biggest milestones in someone’s life and should be remembered with fondness, but for so many, it’s an ordeal they’d rather forget. A lot of it comes down to the stress and inconvenience of the mortgage application process. It’s therefore understandable that so many people are reluctant to think about their mortgage when the time comes to switch, but the sad result is that homeowners are collectively losing billions of pounds a year.

“The good news is that things are improving, if in pockets. We’re already seeing dramatic progress in the mortgage customer experience, with the use of technology speeding up and simplifying the whole process. This in turn should help to address some of the causes of the inertia costing homeowners so much money.”