According to research from Santander, around a third of mortgage holders (34%) make overpayments on their mortgage which amount to an average of £181 per month, with many doing so to take advantage of record low interest rates.
The figures reveal that around one in five (19%) overpay every month while 6% do so on an annual basis, and a further 9% make ad-hoc payments as and when they can. It's a largely recent phenomenon too – of those who overpay on a regular basis, 13% only started doing so in the last six months and 24% within the last year, while 54% started overpaying within the last two years.
Encouragingly, even those that don't currently overpay might be able to afford to with over a third saying they could pay an extra 18%, with many not doing so simply because they don't know if their mortgage provider allows it.
These figures would indicate that low interest rates have had a highly positive impact on the mortgage market, with a lot more people being able to overpay and potentially reduce the outstanding balance of their mortgage before rates start to creep back up.
"If you can afford to, what better way to take advantage of low interest rates than to overpay your mortgage? That way you can enjoy being 'mortgage free' much earlier than originally anticipated and the knock-on effects can be just as beneficial. The money that once paid for a mortgage can instead go towards a bigger pension pot or holidays or helping the kids get on the first rung of the property ladder – the list is endless."
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