Overpaying mortgages - what are the benefits?

07 December 2009

Written by Gavin Elley

Overpaying monthly mortgage installments at this current time allows homeowners - including those who rent out their properties - to take advantage of low interest rates.

That is according to spokesperson for the Council of Mortgage Lenders Bernard Clarke, who claimed that repaying a mortgage at the rate it was before the cost of borrowing dropped can get the loan out of the way.

"If you're a borrower who's on a variable interest rate and you've seen your borrowing costs reduce as a result of reductions in base rates, you may decide to overpay your mortgage in order to clear the commitment earlier than you anticipated," he explained.

Last week, the Independent published a report, which suggested that Britain's biggest mortgage lenders are seeing an increasing number of their customers choosing to overpay on their mortgages.

It comes after the Bank of England's monetary policy committee brought the interest rate down to a record low of 0.5 per cent in March this year.

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