New ESRI research has found some serious misunderstandings about how mortgages work.  The Economic and Social Research Institute has found that mortgage holders can get a better deal when they read independent advice. However, the think tank also found some serious misunderstandings about how mortgages work.  The ESRI and the Competition and Consumer Protection Commission brought together a sample of 110 people with mortgages and gave them a series of questions. The experiment found that before reading the advice, some had opted for cashback offers in preference to offers with lower Annual Percentage Rates or APR’s. This would have meant higher repayments over time. The exercise also found that only a third knew that switching mortgages involves paying for a solicitor, while only a quarter knew about the need to pay for a property valuation.  Three quarters also misunderstood what an interest only mortgage was and one in ten misunderstood their debt liability were they to fall into arrears. “There are large gains to be had for many families by switching mortgages, so it is encouraging to see that reading official advice improves consumers’ decision-making and their confidence,” Dr Shane Timmons, of the ESRI’s Behavioural Research Unit said. “Cashback can be useful, but in our experiment, consumers placed too much weight on it until they read the advice. Generally, most people are better off securing long-term savings from a lower APR,” he added.  The research clearly shows that it is worthwhile to take some time to review the independent information, including the mortgage comparison tool, at ccpc.ie. 

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