Mortgage borrower repaying ahead of schedule

| December 2, 2009 | 0 Comments
”Mortgage

The Co-operative Bank has reported that the number of borrowers paying off their mortgages ahead of schedule has soared 56% in the past year.

The trend is at its strongest among variable rate customers who are taking advantage of the record low base rate, at 0.5%.

The benefits can be twofold as early repayment reduces the overall cost of a mortgage and allows a homeowner to increase the amount of equity in their property, and thereby remortgage at a lower rate.

Currently, the Co-operative Bank allows borrowers on its lifetime tracker and standard variable rate mortgages to repay up to 100% of their loans when they please, but the lender is introducing a pilot scheme to allow borrowers who have already made substantial overpayments to pay off up to 50% of their mortgage with no penalty.

Under the scheme, repayments will be treated separately from the bank’s normal overpayment facility and will therefore immediately reduce the outstanding balance of the mortgage.

The Co-op’s head of mortgages, Terry Jordan, says: “With many economists predicting that the interest rate environment will remain low into 2010, we will be monitoring this pilot scheme in detail, with a view to rolling it out across more customers next year if successful.”

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