Overpaying mortgage is a ‘smart move’

Overpaying mortgage is a 'smart move'

Overpaying the mortgage has become a ‘smart move’ in the wake of the credit crunch, finance experts said yesterday.

Sharon Bratley, chartered financial planner at Fairinvestment.co.uk, said that with the recent fall in house prices, homeowners with more equity will be in a stronger position to remortgage if they need to do so in the near future.

She added: “Making overpayments on a mortgage, if allowed, would also be a smart move in the current financial climate.”

Ray Boulger, from mortgage broker Charcol, said home owners should use low interest rates as an opportunity to overpay on their mortgage.

“My advice to these borrowers would be to use the current low interest rate environment and the consequent savings very wisely,” Boulger said.

Meanwhile, the Co-operative Bank said that on a 25-year mortgage of £100,000, monthly overpayments of £50 could knock 3.6 years off the mortgage term.

Co-operative spokesperson Terry Jordan said: “We are encouraging overpayment.

“Overpayment is an option on all our mortgages and is a benefit for the customer and the lender.”

Currently just 6% of people in the UK are choosing to pay more than the required minimum on their mortgage.

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