Jun 10
10
With talk of increased interest rates on the horizon Colchester mortgage advisors are urging their clients to overpay their mortgage while they can. The benefits of overpayment are clear – it reduces the debt faster, gives the opportunity to access deals with more favourable interest rates and it increases the amount of equity in the property. It is therefore surprising how many people decide to keep any ‘spare’ cash they have in savings accounts, when it would be much better used to pay off the biggest debt they are likely to ever have.
It seems that in Colchester, mortgage advice such as this has primarily fallen on deaf ears up until now. It has dawned on homeowners that whilst the UK has been enjoying the lowest mortgage rates for years they could have been keeping up the original monthly repayments to reduce their debt rather than using the ‘surplus’ cash for other purposes. It is not surprising that when interest rates fell that borrowers who found themselves with an extra hundred pounds or more a month decided to use it for something other than paying a mortgage.
However, with tougher times on the horizon, overpayments made now will still make a dent in the debt and it will also brace borrowers for the inevitable – mandatory higher repayments. Mortgage advisors in Colchester are highlighting the benefits of overpayments in terms of saving money, but also as a safety net. Many people find it difficult to adjust their spending when outgoings go up, and if interest rates rise significantly, there is a serious risk that some borrowers may fall into arrears with their mortgage payments. By following the advice being offered by mortgage professionals, Colchester homeowners may not be able to afford as many of life’s little luxuries, but they will be prepared for what at the moment looks like a somewhat uncertain future.
