Use the cuts to shrink your mortgage
Posted on 21 November 2008 by
The historic cut in interest rates of 2% over the last two months has seen many mortgage borrowers’ monthly payments reduce dramatically. You should, if you can, maintain pre-cut payments and use the low interest rate environment to overpay on your mortgage. The vast majority of borrowers will be able to pay off their loan six years earlier and save thousands of pounds in interest. And, of course, this is without factoring in further cuts in rates.
Everyone is aware of the faltering economy, but many may not be aware of how to use this to their advantage. As interest rates fall, it provides the perfect opportunity for borrowers with trackers to pay their mortgage back quicker, without noticing any difference in their pocket every month. To see a huge difference all borrowers need to do is keep their monthly payments at the same level that they were paying before the cuts. Taking six years off your mortgage is something we would all like to do.
To work out the specific savings available, borrowers should visit the award winning mortgage calculators on Charcol.co.uk which will show them what effect overpaying can have. These are available at www.charcol.co.uk/knowledge-resources/calculators/.
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and neither John Charcol nor Drew Wotherspoon will accept liability for them.