Homeowners advised to overpay mortgage
Homeowners are advised to show a willingness to overpay their mortgage to access better products, according to personal finance site the Motley Fool.
The advice follows the Bank of England decision to leave interest rates unchanged at 5.75 per cent yesterday, dubbed a “wait-and-see” approach by the personal finance company.
David Kuo, head of personal finance at the comparison site, said: “Consumers should not look to the Bank of England for guidance because lenders are marching to the beat of a different drummer.
“Overpaying a 25-year £100,000 mortgage at six per cent by £64 a month will cut the length of the mortgage by over four years. It will also slash your interest bill by almost £20,000.”
The amount of mortgage products available has reduced by around 40 per cent compared to July, making the overpayment strategy more important for those consumers reaching the end of fixed-rate deals.
Meanwhile, mortgage provider Scottish Widow has predicted a drop in the base rate of interest to 5.25 per cent within six months in order to “keep inflation to target on the two year horizon favoured by the Monetary Policy Committee (MPC).”
