Two in five home owners, some 41%, in the UK suffer from mortgage stress and 70% want lenders to go digital, according to a new national study.
Paperwork and jargon are regarded as the biggest contributors to this stress which is affecting some 625,000 new borrowers each year, the study from online mortgage broker Trussle has found.
Some 20% said there was too much paperwork involved in the mortgage initial application and subsequent remortgage process, while 15% claimed the industry’s prevalent use of jargon was the main issue.
When asked what could be done to reduce stress levels, a large number of customers wanted mortgages to become more digital. Three quarters said lenders should be legally required to make their outstanding balances accessible online, while 70% wanted a downloadable mortgage statement, generally posted by lenders once a year.
The form warns that because paperwork can be so time consuming, some borrowers risk lapsing onto their lender’s high interest Standard Variable Rate (SVR) deal while attempting to remortgage. This can cause significant financial damage.
For example, until a home owner has sent their annual mortgage statement to their new lender, along with personal documents such as their passport, they won’t be able to switch. It can take up to six weeks to replace a lost annual mortgage statement. In this time, the average customer lapsing onto their lender’s SVR would pay almost £400 more a month.
In an experiment involving one of the big six lenders and a local conveyancing firm, Trussle found that a mortgage customer was required to deal with 219 sheets of paper to complete their home purchase.
‘I’ve experienced the frustration of struggling to secure a mortgage first hand. There‘s too much jargon, too much complexity, and not enough transparency. Millions of people lose out not only financially, but emotionally as a result,’ said Ishaan Malhi, Trussle chief executive officer.
‘Your mental health is no less important than your financial or physical health, so I’d like to see modern brands working hard to reduce the friction and stress of their products and services,’ he explained.
‘The mortgage sector has traditionally been one of the worst offenders, with 40% of borrowers finding the process stressful and a third sitting on the wrong mortgage, collectively spending £15 billion a year too much on interest as a result,’ he added.
‘If service providers focus on making the overall user experience simpler, more intuitive, and accessible, hurdles will be reduced and many people are going to save money in the process,’ he concluded.
Source: Property Wire