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Mortgage borrowers should look to overpay

Mortgage borrowers should look to overpay

Category: Mortgages

Updated: 22/01/2009
First Published: 21/01/2009

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Increasing numbers of homeowners are making monthly overpayments to their mortgage, according to Lloyds TSB and Cheltenham & Gloucester.

Since the Bank of England's bold decision to cut base rate by one and half percentage points in November last year, Lloyds says more than 27,000 customers have contacted them to set up an overpayment.

7,000 requests were made in November, more than 12,500 in December and 7,900 in the first two weeks of January alone.

The bank says the combination of low interest rates and making overpayments can significantly reduce the term of a mortgage.

"Homeowners with a tracker mortgage are hundreds of pounds a month better off," said Stephen Noakes, C&G marketing director. "For those who can spare the extra money, making overpayments is a smart move. Not only can it trim years off your mortgage term, but with house prices falling, overpayments will help to protect the equity in your home."

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