A report commissioned by Standard Life has found that consumers focus on the short-term rather than on long-term value when choosing a mortgage.
Homeowners could be £15,000 worse off by choosing a discounted mortgage over one that charges a low standard variable rate (SVR), unless they remortgage regularly.
Most consumers questioned said that the main factor for choosing a mortgage was initial low repayments. Even when shown that another mortgage was cheaper over 25 years, they still went for the cheapest upfront option.
Regular remortgaging means keeping on top of the best deals, but Standard Life research has shown that 45 per cent of consumers remortgage just once and only 5 per cent of the population will remortgage enough times to save money.
This means that 95 per cent of consumers will be better off choosing a low SVR over a discounted deal that may revert to a high SVR once the deal period has ended.
Those that dont remortgage could end up paying £77,000 in fees and additional interest.
Typically, customers need 12 years at least six two-year discount periods to have a lower total cost from a discounted mortgage compared to sticking with a non-discounted low SVR mortgage.
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