Financial expert Aaron Peake from CredAbility has warned that thousands of homeowners may be paying thousands of pounds more on their mortgages than necessary due to a simple error. A mistake in your credit report could result in paying an additional £400 per month on a £200,000 mortgage, which could add up to more than £129,000 in extra payments over a 25-year term.
Peake explains that even with a sufficient deposit, a low credit score could lead to higher mortgage rates, making the loan more expensive. “Most people are aware that a poor credit score can make it harder to get approved for loans, credit cards, or even a mobile phone contract,” he said. “However, the impact of a poor credit score on a mortgage can be far more significant than many realize.”
The difference between a good and poor credit score can result in tens of thousands of pounds in additional payments over the course of a mortgage. If you were to take out a £200,000 loan over 25 years, just a few percentage points difference in the interest rate could lead to substantial financial losses. For example, if your credit score qualifies you for a 4% interest rate instead of a higher one, you could save thousands of pounds in interest over the life of your loan.
Peake emphasized that lenders use credit reports not only to decide whether to approve a mortgage application, but also to determine the interest rate that will be offered. A small difference in the rate may not seem like much at first glance, but it can have a massive impact on the total amount paid over the course of the loan. In the long run, even a seemingly minor error in your credit report could cost you more than you ever anticipated.
This warning comes as part of an ongoing effort to raise awareness about how critical it is to regularly check your credit report. Ensuring that there are no mistakes or discrepancies is essential for maintaining financial stability and avoiding unnecessary expenses, especially when it comes to large financial commitments like a mortgage.
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