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Big rise in homeowners overpaying mortgage debt

04/12/2009

The Co-operative Bank has seen a 56% annual increase in the number of customers making mortgage overpayments, as people take advantage of low interest rates to clear more of their mortgage debt.

Not surprisingly, people on variable rates are more likely to overpay - three times more likely than people on fixed-rate deals, as Mortgagestrategy.co.uk reports.

According to the Co-op Bank, the majority of borrowers in the initial period of their mortgage deal can make overpayments worth up to 10% of their mortgage debt every year without any penalties. Customers on lifetime tracker and SVR (Standard Variable Rate) deals face no restrictions on overpayments.

"With interest rates continuing to remain at the current low level, we have been following developments in this area closely," said Terry Jordan, Head of Mortgages at The Co-op Bank, adding that "Our data shows a real trend in the number of customers electing to make overpayments […]."

"Making overpayments towards their mortgage debt can make a big difference to a household`s long-term financial situation," said a spokesperson for Debt Advisers Direct.

"It can significantly shorten the amount of time it takes them to clear their mortgage debt altogether - and save them a great deal of money, as they`ll have less debt accruing interest."

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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).

More than 4 million fear they`ll be made redundant 16/12/2010 - According to R3`s quarterly personal debt tracker, more than 4 Consumers took on more mortgage debt in July 26/08/2010 - Consumers took on £2bn more mortgage debt than they repaid Debts called in by parents 26/08/2010 - According to research, `the bank of Mum and Dad` is Teenagers `scared of debt` 19/08/2010 - Nearly two thirds of teenagers are `scared` of debt, according