Property owners are trying to reduce their monthly mortgage repayments as much as possible by overpaying on their home loan.
According to Money Mail’s analysis of government data, they spent £23.3 billion on mortgage overpayments in 2022, with £6.7 billion of this being in the last three months of the year.
These quarterly figures are the first time overpayments have exceeded £6 billion since 1999 when government records began.
This could be in response to skyrocketing mortgage rates following the government’s Mini Budget in September 2022, leading to homeowners wanting to overpay to avoid paying more in interest over the coming months.
While mortgage companies typically let customers overpay their loan by up to ten per cent without having to pay charges, this has been increased by some providers recently to help homeowners with their finances in the long run.
The more of their asset they own, the less they will have to pay in interest. However, it also gives banks security if their mortgage customers own a greater proportion of their house, as they are less likely to default on payments.
Some households will be worried about their mortgage deal coming to an end soon if they have been on a fixed-rate. It could mean 1.8 million homeowners who have to take out a new product could be paying much more per month for their mortgage.
To understand whether it is a sensible idea to overpay your loan or not, call our mortgage advisors in Liverpool who can explain it to you.