Should I Overpay My Mortgage Or Save My Money?
August 29th, 2011 | Author: Pearl
The question of whether to over pay your mortgage or accept a low return on your money invested is an importance issue in today’s economic climate. As a money saving expert, I will explain how you can save thousands of pounds by over paying your mortgage and why it is more tax efficient than saving money in the bank or building society if you have a mortgage.
As the Bank of England drives down interest rates in an attempt to control deflation; savers are left earning a pittance from their savings whereas some mortgage borrowers are saving hundreds of pounds in reduced mortgage payments each month. Borrowers on Tracker rate and those on the Standard variable rate mortgages have seen their mortgage costs drop drastically in some instances and they now find themselves with extra money in their pockets. The Co-operative Bank Mortgages department recently revealed that they had seen a 50% increase in mortgage borrowers making overpayment into their mortgage accounts.
What the Co-operative Bank discovered
The Co-operative bank conducted a poll of 1000 adults from their bank to expose some of the reasons why borrowers were overpaying their mortgages. It revealed that 80% of those polled declared their reason for overpaying their mortgage was due to low returns on their savings accounts; some 37% choose to pay extra money off their mortgage due to the reductions in the base rate; whilst 24% of borrowers were choosing to disregard the recession and spend their surplus money on clothing and holidays. The Co-operative bank said it appeared that customers were recognising the benefits of making overpayment in light of the historical low interest rates being paid to savers at present.
Flexible Mortgages are the Future
Some mortgage lenders will not allow overpayments, while other lenders would allow a maximum of five or ten percent overpayment each year. Other lenders like the Co-operative bank and the Northern Rock will allow their borrowers to overpay larger amounts off their mortgage balances each year. In the case of the Northern Rock they will allow the borrower to overpay the whole amount to within
Posted in Mortgage | 
Tags: Bank Mortgages, Economic Climate, Extra Money, Flexible Mortgages, Money Mortgage, Mortgage Lenders, Standard Variable Rate, Surplus Money
Pearl