With interest rates at all time lows of just 0.5 percent many homeowners in the UK have seen their mortgage repayments fall, and some have decided to make the most of the situation by continuing to make higher repayments and overpaying on their mortgages.

Industry officials have said that these overpayments can really help homeowners, as it can reduce the amount of interest that they pay over the term of the loan by tens of thousands of pounds, and could shave years off the mortgage term.

However, one recent report has suggested that some homeowners could actually benefit more from not overpaying on their mortgages, and instead saving the money.

The report claims that homeowners with low mortgages rates could be as much £1200 a year better off by doing this. It also said that many could enjoy even greater benefits by taking their money out of an offset deal and moving it into fixed rate bonds.

The report suggests that these homeowners could be far better off by saving the extra money that they have as a result of the base rate falling to this all time low level, and then making overpayments on the loan when the interest rate starts to go up again.

It is likely that interest rates will start to rise again next year, with many economists predicting that once the recession is over the Bank of England could start increasing the base rate quite quickly.

The base rate has dropped from 5 percent towards the end of last year to just a tenth of the level at 0.5 percent since April of this year.

This has seen many homeowners on standard variable and tracker mortgages see their repayments fall by hundreds of pounds a month, and on the advice of financial experts many have continued to make the higher repayments in order to cut their mortgage term and reduce the interest that they will pay.

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