Paying down mortgage debt is more cost effective
February 02, 2012
Although some 25 per cent of people are unsure if they are allowed to overpay on their mortgage, Paula John, editor-in-chief at Your mortgage, explains that paying off a mortgage should take priority if people have excess funds.
"People who can afford it and have got spare cash, have been taking advantage of overpayments because interest rates are very low," she said.
However, not enough people are taking advantage of this opportunity and are continuing to put money into savings accounts, which does not make sense when paying down debt is the "more cost effective thing to do", according to Ms John.
One of the reasons why Britons may not be taking advantage of overpayment opportunities is because they are unaware of the details of their mortgage.
Research by First Direct has revealed that some 43 per cent of homeowners are unaware of the total cost of their mortgage, while 42 per cent do not know their overpayment limit.
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