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 Thousands of Brits are struggling to keep up with mortgage repayments and it seems that many are clueless as to why this is the case.
A survey has revealed that many people struggle to understand the basics when it comes to interest rates and are confused as to why their repayment costs are so high.
The research conducted by CreditExpert.co.uk found that only seven out of ten homeowners questioned correctly knew what impact a 0.5 per cent interest rate rise would have on monthly payments for a £100,000 interest only mortgage.
Meanwhile, eight out of ten of those polled had no idea what the term APR, or annual percentage rate meant – with half believing it was the same as the interest rate itself.
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"Although the current Personal Credit Index shows that people generally are more confident than in the last quarter, the lack of understanding of key terms and the effect of interest rate changes is worrying.
"It's important for people to be familiar with standard financial terms and stay on top of changes that affect their personal finances so they can make the best possible decisions and choices," says Jim Hodgkins, managing director of CreditExpert.co.uk.
Thousands of Brits are currently struggling with their mortgage repayments following five interest rate rises since last August - with some facing mammoth debts and others repossession
Julian King of quick house sale firm National Homebuyers says: "It's not simply the increased costs to the homeowner that are of concern, it's also an understanding of the effect of selling a property that homeowners lack.
"If interest rates are high, there are fewer people entering the market. If there are fewer 'customers' or buyers, then the price will have to come down to meet the level of demand
"Homesellers should also be aware that as there are fewer buyers it will mean that the amount of time it takes to get a sale will increase. For some who need a quick property sale, this is not an option."
Mr King is a director of National Homebuyers, the UK's leading fast house sale company that guarantees to make an offer to purchase any property in any UK location, regardless of its condition or vendors need for a quick sale.
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