Existing tracker mortgage holders could save £27,000 says uSwitch.com

10 November 2008 / by Rebecca Sargent
Lucky tracker mortgage holders could save as much as £27,000 following the Bank's drastic rate cut of 1.5 per cent yesterday, according to uSwitch.com.

The comparison site found that someone with a tracker mortgage rate of 4.77 per cent, borrowing £150,000 over 25 years, could save £27,190 in mortgage interest as a result of yesterday's Bank rate cut.

Commenting on the potential savings to be made, personal finance manager at uSwitch.com, Louise Bond, said: "Following yesterday's base rate cut, people on tracker mortgages could make savings of up to £134.46 a month, or £1,613.52 a year.

"There are of course some that are suffering from the credit crunch and may need to use this cash for other things. However, those that don't need the extra money should really think about overpaying the mortgage if the deal they are on allows it.

"Overpaying the average tracker mortgage by the monthly saving of £136.46 will reduce the total amount of interest paid by £27,190 and the term will drop by almost six years."

However, Lloyds TSB advises tracker mortgage customers to use any money they save to take care of debts first, and the next priority should be investing in a high interest savings account like the Halifax International Fixed Rate Web Saver, as well as over-paying the mortgage.

Marketing director at Lloyds TSB mortgages, Stephen Noakes commented: "Following yesterday's base rate cut many homeowners on a tracker rate or SVMR will soon find themselves with extra cash available and in today's economic climate it's essential to make the most of these new found savings.

"We would encourage homeowners to use the opportunity to reassess their financial situation and take action by addressing outstanding debts, protecting equity in their home or growing a nest egg," Mr Noakes concluded.

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