Borrowers Paying Off Homeowner Loans At A Record Level
The credit crunch and economic slow down has brought doom and gloom to many individuals, particularly those with loans secured on their homes, or those looking to buy a property with a mortgage or homeowner loan.
But amidst all this despair, there has been a significant amount of good news for existing homeowners with an outstanding loan balance, particularly if they are currently on a tracker or standard variable rate loan with their current lender.
Following the recent drops in the base rate of interest from the Bank of England, many borrowers have seen their monthly loan repayments plummet, with some lucky homeowners paying less than 1 per cent in loan interest each month.
This has had the effect of saving many borrowers huge amounts on their homeowner loan repayments, in some cases this can amount to hundreds of pounds every month. Some of the more forward thinking individuals in this enjoyable position have been taking advantage of the low interest rates and loan repayments to knock, in some cases, several years off the term of their loan, by maintaining their repayments at the same level as they were prior to the rate reductions and therefore overpaying on their homeowner loan.
Overpaying on a homeowner loan can save thousands of pounds in interest payments over the term as well as meaning that the loan can be repaid in full several years earlier than it would otherwise have been.
According to research by First Direct, around 11 per cent of homeowners are now taking advantage of overpayments on their loans. First Direct spokesman, Jimmy Kelly said “For many, a mortgage represents the biggest debt they will ever have. The typical householder will have five mortgages over their lifetime, which is a massive commitment. But by making sound financial decisions, freedom can be closer than ever before.”
