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Homeowners urged to overpay mortgage debt

22/07/2009

Homeowners are being encouraged to overpay their mortgage debt while interest rates remain low in an effort to save money and lower the risk of negative equity, The Guardian reports.

As the Bank of England`s base rate remains at a historic low, many people have the opportunity to benefit from this by overpaying their mortgage debt. For example, by overpaying, borrowers should be able to lower the total amount they owe to their lender, reduce their monthly payments later on and repay their entire mortgage earlier.

In most cases, lenders will allow borrowers to overpay up to 10% per year without incurring any penalty.

A spokesperson for Debt Advisers Direct said: "Homeowners who have `spare` income each month should certainly consider overpaying their mortgage debt - especially at a time like now when interest rates are low.

"If they do, it could take years off the repayment term and save them a lot of money in interest in the long run."

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

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