Rise in mortgage overpayments

9 March 2009

Recent falls in interest rates have led to a surge in the number of homeowners making overpayments towards their mortgage debt, according to one bank.

Figures from the Co-operative Bank showed that the number of customers making overpayments has increased by 50% in the past year.

The research also revealed that 80% of those making overpayments were doing so because they felt it made better financial sense than putting money into a savings account at this time. Meanwhile, 37% were overpaying due to their lower interest rates freeing up additional funds, while 7% were trying to increase their equity to secure a better deal in the future.

A spokesperson for debt management company Gregory Pennington said: "Making mortgage overpayments is often a good use of homeowners` money, since it decreases the chance of falling into negative equity, and the money is likely to grow in the future.

"Also, since some debt solutions rely on equity in the borrower`s home, increasing equity by making overpayments can offer some extra protection against any financial difficulty they may face."

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Gregory Pennington offer debt management plans as well as a range of other debt solutions. If you are worried about debt, contact one of our expert debt advisers now.

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