Millions of homeowners could be missing out on the opportunity to shave years off their mortgage, it has been revealed.
Research by Barclays found that 84% of homeowners have passed up the chance to reduce the amount of time it takes to pay off their mortgage by overpaying.
The bank has urged those homeowners who are not overpaying to start if they can afford to whilst interest rates - and many tracker mortgage monthly repayments - are still low. Its survey showed that only 10% of homeowners are currently overpaying on their mortgage, while just a further 6% intend to start overpaying this year.
The average overpayment is currently £200.82, which on an average mortgage of £150,000 over 25 years could see the term reduced by seven years and three months.
However, Barclays says that overpaying by as little as £50 can have a huge impact - on the same typical mortgage, an extra £50 per month would reduce the term by two years and four months.
"We are still experiencing low interest rates and mortgage affordability is at its best levels for more than a decade, so we would urge borrowers who can afford it to start overpaying now," said Andy Gray, head of mortgages at Barclays.
"Putting an extra £100 to their mortgage each month will pay off their mortgage four years earlier and reduce the amount of interest that is paid.
"Most mortgages allow a generous 10% overpayment per year so rounding your repayments up to a few pounds more a month is a really good habit to get into if you can afford it and will reap its rewards when you are mortgage free years earlier than planned!"
The lender points out that even though interest rates seem set to rise in the near future, many borrowers are still likely to able to afford to overpay something.
It calculates that a homeowner on a typical £150,000 mortgage tracking at 2.49% above base rate would see their monthly mortgage payments increase by around £20 a month for each 0.25 increase in base rate.
Borrowers will therefore benefit overpaying by as little as £50.
"I'd urge all homeowners to review their current mortgage arrangements to ensure their repayments remain affordable throughout 2011 and beyond and to ensure they have a contingency plan when interest rates start to increase. This could be as simple as remortgaging," added Mr Gray.
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