Mortgages overpaid by 1 in 3 homeowners
Monday, 7 March 2011 12:23 PM
Almost one-third of British households have taken advantage of low interest rates to overpay their mortgage during the past year.
Research from financial help site Moneybasics.co.uk, 29 per cent of borrowers have paid more than they had to in the last 12 months, with 37 per cent of those overpaying by a total of £2,500 or more.
More than half of respondents said that their main reason for paying above what was required was simply to have their mortgage done and dusted early, while 15 per cent were looking to harness the current low interest rates to reduce future repayments.
One in ten people said that they had simply kept their payments at the same level as they had been before interest rates started to drop.
A further seven per cent of borrowers were overpaying in anticipation of increased interest rates, which could potentially pose financial challenges in the future.
Joanna Parsley, associate director of Credit Action, commented: "With historically low interest rates and rising inflation, it is not surprising that many people are choosing to increase their mortgage payments and reap the long-term benefits of overpayment."
However, homeowners were warned to read the terms and conditions of their mortgage before making extra payments, to ensure that they would not incur penalties for doing so.
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