Benefits of overpaying mortgage highlighted
Industry officials have recently highlighted the benefits of overpaying on a mortgage loan, as the practice of paying more than is necessary on a mortgage loan becomes more popular.
Officials from the High Street banks, HSBC, have stated that consumers would be acting wisely if they used the series of Bank of England base interest cuts to try and increase their chances of being able to pay more off on their mortgage.
A number of people are thought to have increased their chances of repaying their mortgage quicker by keeping their monthly mortgage repayments as they are even though the base interest rate has plummeted, which could effectively mean lower repayments each month. By keeping repayments the same as they were before the rate cuts borrowers could save thousands of pounds in interest and could cut years off their mortgage.
One industry official said that one of the groups most likely to benefit from overpaying on their mortgage was older homeowners, as they could most benefit from the low interest rates. The head of mortgages at HSBC said recently: “Overpaying their mortgage could reduce its term by years and save them thousands of pounds in interest.”
Officials from Lloyds TSB have stated that consumers that continue making the same repayments as they were in December 2007 rather than dropping the repayment to match the current 1.5 percent interest rate could actually find that they are able to repay their mortgage twelve and a half years earlier than the term over which they had taken the loan. They could also save huge amounts of interest on the loan. The base interest rate has recently fallen to the lowest level in the history of the Bank of England, which spans over three hundred years.
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