People 'lack mortgage knowledge'

The FSA website promises to lay the mortgage world bare

Many consumers have trouble understanding how mortgages work and are baffled by lenders' jargon, a survey has suggested.

Nearly six out of 10 consumers said they did not know what APR (annual percentage rate) stood for.

In addition, 52% of 800 mortgage holders interviewed were unaware what APR they were paying, according to the Financial Services Authority (FSA).

To educate consumers about mortgages, the FSA has launched a new website.

Mortgage choice is a good thing but consumers need to arm themselves with more knowledge David Whitely, FSA spokesman

Laid bare

The FSA, which assumed regulatory responsibility for mortgages last year, says it wants to help explain mortgages to consumers.

To this end the regulator is spending £1.5m publicising its new website called www.mortgageslaidbare.info.

The website offers users tips on shopping around for a mortgage deal, information on different types of mortgages and interactive tools allowing them to work out what level of repayment they can afford.

People will also be able to use the website to check to see if a firm is authorised to offer mortgage advice.

"It use to be the case that consumers would be offered one type of mortgage by their bank or building society... these days there are so many different types of mortgages available, all with their own jargon," David Whitely, FSA spokesman, told BBC News.

"Mortgage choice is a good thing but consumers need to arm themselves with more knowledge, this is where the website comes in," Mr Whitely added.