Rate cut helps borrowers pay off mortgage over 6 years earlier

The historic cut in interest rates of 2% over the last two months has seen many mortgage borrowers' monthly payments reduce dramatically. Charcol.co.uk is urging borrowers, if they can, to maintain pre-cut payments and use the low interest rate environment to overpay on their 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.

Drew Wotherspoon, director, John Charcol, comments: "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."

Of course, the term length savings will be even greater should bank rate, as predicted by many market commentators, come down further.

Wotherspoon continues, "The savings, particularly in the time it takes to pay off a mortgage, are really impressive and should be considered by all borrowers who can. Of course, should borrowers have expensive debt elsewhere, such as credit cards, they should concentrate on paying these off first, but should get to the mortgage as quickly as possible to take advantage of such low rates."

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 charcol.co.uk/knowledge-resources/calculators/.

Wotherspoon concludes, "Knowing what your options are is of paramount importance, but nothing beats personal, detailed mortgage advice from a whole of market broker. They can look at future plans and see whether paying off suits you as an individual. I would urge borrowers to speak to someone who understand their particular options and make the right recommendations. With a mortgage being the largest financial commitment that most of us will ever make it makes sense to get the very best from it."