Increasing number of UK property owners preferring overpayments on mortgages

Posted under General by Jermaine

More number of property owners seems keener on clearing their mortgages as early as possible by making overpayments. The number of these owners has increased by 50% in the last year.

Research figures from The Co-operative Bank reveal that 80% of people are doing this believing that it made financial sense because of low return on saving rates.

The Co-operative Bank research also highlighted that 37% owners were doing overpayments because interest rate had fallen substantially due to cut in the base rate.

According to the head of mortgages, Terry Jordan, at The Co-operative Bank, increase in mortgage customers making overpayments is 50%. He adds that since interest rates are at historic low, customers are seeing more benefit in making overpayments.

The research also revealed that one third of those not overpaying preferred putting money into savings and 24% of owners were spending surplus amount on clothing and holidays.

According to the Council of Mortgage Lenders’ spokesperson, overpayments trend was growing because borrowers want to take advantage of reduced mortgage rates to minimize their mortgage balance and shield themselves from adverse effects of falling prices.

The spokesperson added that overpaying would improver borrower’s equity position, reduce interest payments and shorten period of loan.

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