Homeowners looking to cut their monthly expenditure should consider switching their mortgage to take advantage of the current record-low interest rates.
Recent figures from Halifax showed that the percentage of disposable income that an average family spends on their mortgage has dropped by 40 per cent in less than two years. In August, mortgage repayments equalled 29 per cent of a family's disposable funds compared to 48 per cent during the third quarter of 2007.
Catherine Hearnden, director of MyMortgageDirect, explained that those homeowners on tracker rate mortgages products have seen their monthly payments decrease substantially following the Bank of England's interest rate cut to 0.5 per cent.
She explained: "The ones who have been on trackers are feeling a huge amount of benefit. Some people are paying silly money – virtually nothing for their mortgage."
However, Ms Hearnden stressed that homeowners need to consider that interest rates could start to rise once the economy begins to improve and, therefore, it is vital for people to shop around for the deals that offer the best option in the long-term.
"The rate has gone down and the amount they are paying out has gone down, but they haven't taken advantage of that to convert to repayments," added the director.
Remortgaging can involve switching to a new home loan via a new lender or arranging a new deal with the current provider and can result in substantial savings. It is important that homeowners consider all the options available including fixed, variable and tracker rates as well as ensuring they read the small print on mortgage deals to assess possible remortgaging charges.
Some more flexible mortgage products can suit those looking to be able to overpay or underpay their mortgage depending on their financial situation as well as offering the option to take payment holidays during certain times or due to a change in circumstances.
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