Despite homeowners being able to potentially save almost £300 per month by switching mortgage providers, 58% of them are put off by the jargon-filled contracts, revealed data from Habito.

Habito found that this lack of switching, due to the confusing contracts, is costing consumers across the UK an estimated £15.5bn per year.

Research from University of Manchester senior economics lecturer Dr. Peter Backus revealed that households with a GCSE reading level are staying on more expensive mortgage deals for up to 12 months longer than those with a higher-level of education.

“Following the analysis of live (in-market) mortgage deals, my research shows that over half (55%) of mortgage holders could reduce their payments and save nearly £300 per month by switching. As a percentage of their current monthly payment, it's households with an educational reading age of Year 11 (GCSE) or below, who would benefit from switching the most. We also see that these households are more likely to be on variable rate mortgages, leaving them more vulnerable to future changes in the Bank of England base rate,” Backus said.

Additional polling has also found that more than 50% of adults think they have overpaid for something because they signed a contract without fully understanding it.

The statistics illustrated that one in three mortgage holders said they only read up to a quarter of the way through their contract because they were confused by the language it contained. Over half of the respondents said that the legal jargon should be rewritten to make it easier to understand, while 48% said that the terms and conditions needed to be rewritten and the 34% said the explanations of the implications needed rewording.

Habito founder and CEO Daniel Hegarty said: “For too long banks and lenders have bamboozled consumers with over-complicated industry language, meaning people frequently sleepwalk into signing and staying on hellish long-term agreements that aren't in their best interests. Enough is enough.

“Taking inspiration from the food industry, Habito is making itself a "free from" mortgage broker. For us, this means being free from confusing language, industry jargon and ropey customer communications. The fact that almost everyone wants regulation to force contracts to be easier to understand is hugely telling and we plan to campaign for that to happen.”

Share Story: