Consumers should seize opportunity to overpay their mortgages

Industry officials are urging consumers to seize the opportunity to overpay on their mortgages whilst the base rate remains at its all time low of just 0.5 percent. This is the lowest level the base rate has ever been in the history of the Bank of England, which spans over three centuries, and has been at this level for nearly two years.

However, there are now fears that the base will have to increase at some point in the near future, which will result in repayment for those with variable rate mortgages increased again. Over the past two years these homeowners have seen their monthly repayments plummet, leaving them with more disposable income each month and reducing the risk of repossession for non-payment of mortgage.

However, by overpaying their mortgages whilst they have spare money consumers can significantly reduce the term of the mortgage loan as well as the amount that they end up paying in interest. Officials are now telling consumers to consider making these overpayments whilst they still can before the interest rate increases again. Many homeowners have already been making overpayments since the base interest rate fell, and officials have said that the low interest rates combined with the uncertain future facing many people means that it would be sensible to overpay on the mortgage at this stage.

One official said: “Whilst homeowners may be enjoying the chance to spend some extra money from the savings that they are making on repayments the money would be far better spend on paying off as much of their mortgage debt as possible. Those that have been making overpayment since the base rate fell will save a fortune on the interest that they pay and will find that the mortgage is paid off much, much earlier than had been originally planned.”

Tags: mortgage debt, spare money, sensible, centuries, payment, bank, rates, risk