/ Home & Energy, Money

Mortgage statements – as clear as mud?

House floating on water in life ring

A mortgage is the most significant financial commitment that many of us will ever take on. So why is it we don’t know the ‘ins and outs’ of our mortgages – is the solitary annual statement to blame?

With the average loan taking several decades to pay off and costing thousands of pounds every year, a mortgage is something you’re going to want to keep a close eye on.

We recently looked at repayment mortgage statements from 14 different providers and were pleasantly surprised to see they all met Financial Services Authority rules on what they needed to include. But is there more lenders can do to help us get a better handle of our finances?

Pore over your statement or in the bin?

Now there’s only a certain amount banks can do – I appreciate that no matter what they print on mortgage statements a proportion of people will file or even bin them with just a cursory glance over the contents. But let’s park this naughty bunch.

For those who try to keep a careful eye on their mortgage, is a once-a-year annual paper statement enough? I was surprised to see that in this digital age some providers don’t even allow their customers to look at an up-to-date statement online.

When we asked Which? members how often they’d like to receive a mortgage statement, more than half said they would like to get one twice a year or more. Increasing the frequency of statements seems a pretty easy win.

Financial future at a glance

I also feel it would be great if mortgage statements had some kind of graphic showing where the borrower is on their repayment journey, such as the years left to pay, years since the mortgage started, how interest and capital payments will change over time.

For many, a visual representation of the mortgage may be a lot more helpful in getting a sense of where you are, rather than a lot of numbers on a page.

It could be especially useful for making sense of how your interest payments versus capital will change over time. That is, interest payments far outweigh capital at the start of a mortgage, but gradually capital payments take over and seeing this plotted down could be a tool for financial planning. Many banks don’t even provide a numerical breakdown of how much interest and capital you’re repaying every month, instead only giving an overall monthly repayment total.

What would help you get on top of your mortgage – online access, more frequent paper statements or a visual explaining your progress? Or maybe you just want them to be much clearer without unnecessarily confusing language?

Comments
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Member

I have complained many times to Barclays/Woolwich that their mortgage statements fail to provide sufficient information. Whereas statements for any other type of account are in a ledger format, showing every credit and debit with the transaction date and a running balance, mortgage statements (whether paper or online) fail to show individual transactions, often giving only an annual total for interest debited. This makes it impossible to calculate whether the monthly interest charged was correct based on the balance of the mortgage account during the month in question. It seems that FSA rules allow the banks to get away with this lack of detail. The rules should be changed so that financial institutions have to provide statements in a full ledger format for all types of account.