More than half of homeowners with a tracker mortgage are failing to make the most of record low interest rates by overpaying on their mortgage, research from Unbiased.co.uk has revealed.
The Bank of England has slashed the base rate to 0.5 per cent in the last 12 months, so those with a tracker mortgage have seen their monthly repayments drop significantly, but while some have used this to make overpayments on their mortgage, 53 per cent of tracker mortgage customers have not.
Just 20 per cent have kept their repayments the same since rates plummeted, making the most of the opportunity to reduce the life and cost of their mortgage.
But instead of using the low rates to pay their mortgage off sooner, a quarter of those not overpaying are using the money to pay off their other debts, but 20 per cent are simply frittering the money away.
Meanwhile, 12 per cent of tracker mortgage borrowers are refraining from overpaying on their home loan because they fear their mortgage lender will charge them for doing so.
A further seven per cent are letting the funds that they would have spent on their mortgage build up in their current account, and 20 per cent are using the extra cash to boost their savings.
David Elms, chief executive of Unbiased.co.uk, said that the majority of tracker mortgage customers are wasting the opportunity to over pay on their debt, despite the savings to be made.
However, he takes encouragement from the fact that some borrowers are using the money to save more, or to pay off some of their more expensive debts, such as personal loans and credit cards.
"If you are confused about how to best manage your mortgage and take advantage of low interest rates, professional and personal mortgage advice can make a clear difference. Only a whole of market mortgage adviser will be able to advise borrowers on the best deal for their circumstances."
© Fair Investment Company Ltd