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Complacency costs UK homeowners thousands of pounds

07 Jan 2003

Over 69%* of UK homeowners have not reviewed their mortgage since moving into their current property, and this complacency could be costing the typical UK mortgage borrower £30,000** in interest.

first direct is encouraging all mortgage borrowers to reassess their mortgage requirements to see if they can save money by moving their mortgage elsewhere.

The first direct smartmortgage has a variable interest rate of 4.75% (4.9% APR) and works by off-setting any credit balances against the debit balance of the mortgage - saving the customer money and possibly reducing the term of the loan. first direct also offers its smartmortgage customers a 'life of the mortgage' guarantee - they promise never to charge more than 1% above the Bank of England base rate.

Reduced rate mortgage deals remain popular, with fixed rate mortgages or discounted mortgages accounting for over 42%*** of all mortgages. But it is these types of mortgages that can prove costly to the unsuspecting borrower if they forget to switch at the end of the reduced rate period.

first direct 's Chief Executive, Alan Hughes, said, ”Nobody thinks twice about reviewing their car or house insurance on an annual basis, and yet homeowners are becoming more and more complacent about whether their mortgage still offers the same value for money now as it did 12 months ago.

At first direct we are committed to providing long-term value for money to our customers. It's our commitment to value, combined with our renowned customer service, that ultimately makes first direct an award-winning mortgage provider.”


Key features of first direct 's smartmortgage:

  • smartmortgage currently has a 4.75% (4.9% APR) variable interest rate. first direct guarantees that the smartmortgage rate will not be more than 1% above Bank of England base rate, guaranteed for the life of the loan. This applies to all smartmortgages opened before 1st January 2004.
  • Launched in July 2001, smartmortgage applications have now reached a total of £2.1 billion.
  • first direct is an award-winning mortgage lender:
    • What Mortgage - Best National Lender over 10 years for three years running, in 2000, 2001 and 2002.
  • There are no redemption penalties or Mortgage Indemnity Guarantee (MIG) charges on smartmortgage.
  • Interest is calculated daily.
  • Facility to make overpayments (free of charge).
  • Facility to release equity in the property through 'borrow back' option (free of charge).
  • Capital repayment breaks and/or underpayments permitted (free of charge).

* Council of Mortgage Lender/MORI Financial Services (2001) Annual Mortgage Survey, based on a representative quota sample of 3,391 adults in the UK.
** The £30,000 estimated saving is based on a couple transferring from a standard variable rate of 4.75% (4.9% APR) to a smartmortgage at 4.75% (4.9% APR). It assumes an average current account balance of £4,000 and savings of £15,000 with a £112,000 25-year mortgage at 4.75% (4.9% APR). The estimated saving is for the full term of the 25-year capital repayment mortgage. N.B This £30,000 estimated saving does not take into account the interest that the credit balances would have earned in standalone accounts.
*** 'Fixed, Capped and Discounted Products in the Mortgage Market', Housing Finance, Spring 2002.

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