Many Brits are confused when it comes to sorting out a good deal on their mortgage, a new study says.

Research from John Charcol found that almost a third are unclear on which rate they base their decision to take out a mortgage on, whilst 11 per cent of homebuyers choose a mortgage based on the headline rate.

A third of borrowers make a choice based on the annual percentage rate (APR). This could be a sensible move if they plan to keep their mortgage for its full-term but many people now stick with a mortgage for an average four years before switching, says the company.

Ray Boulger, senior technical manager at John Charcol, says people are in danger out putting themselves out of pocket by choosing the wrong mortgage for their needs.

"Using a comparison tool that is normally calculated on a 25-year term, with typically between 80 per cent and 92 per cent of that term based on a standard variable rate (SVR) which most borrowers will only pay for a short period, is guaranteed to mislead the majority of borrowers who will either remortgage shortly after their initial deal has ended or will take a new rate from their existing lender."

Mr Boulger added that it was important borrowers fully understand everything about the product they are buying and called for more consumer education.

"However, this will only be true if that education focuses on the fact the APR should not be the paramount consideration for the vast majority of consumers as far as mortgages are concerned, unless the rules are changed so the way APRs are calculated are relevant to the modern mortgage," he added.