The number of Co-op customers making overpayments on their mortgage has shot up by 50 per cent in a year, figures have revealed.
The research found that of those currently making overpayments on their mortgage
, 80 per cent are doing so because they feel it makes financial sense due to the low return on savings accounts
at the moment.
More than a third of those making overpayments said they are able to do so because their mortgage rate has fallen as a result of falls in the Bank of England's base rate.
Another seven per cent are making overpayments in the hope of securing a better mortgage deal by increasing the equity they hold in their home.
According to Co-operative Bank mortgages
, a homeowner with a 25 year mortgage of £100,000 who made overpayments of £50 a month could knock more than three and a half years off the term of the mortgage and save £12,000.
Commenting, head of mortgages at The Co-operative Bank, Terry Jordan, said: "It would appear that with interest rates now at an historic low, customers are recognising more than ever the benefits of making overpayments.
"Providing their mortgage allows the flexibility to overpay, at the current time, it can make real financial sense for customers to make even small monthly overpayments, as these can really add up to a large difference over the lifetime of the mortgage." he said.
And, as mortgage rates fall, overpayments could be made with no change to fixed monthly repayments, Sharon Bratley, chartered financial planner at Fairinvestment.co.uk said:
"By keeping repayments at the same level as they were before the cuts, homeowners could make significant overpayments on their mortgages without really noticing any difference to their budgets." Get mortgage quotes and advice »
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