More people being encouraged to use spare cash towards mortgages
April 27, 2010
According to a recent report a rising number of homeowners are being encouraged to use any spare money that they have to pay towards their mortgage loans, which could see many people save a fortune in interest and cut the amount of time over which they will have to make repayments drastically.
Some lenders are encouraging their borrowers to take advantage of the rock bottom rate of interest and put any surplus cash towards paying extra on their mortgages. With continued uncertainty over jobs and finances consumers are being advised to clear as much debt as possible, and recent reports have suggested that many consumers are using their cash to pay off mortgage debt and other debts rather than spending it on luxuries.
David Dooks from the British Banker’s Association said that homeowners were taking advantage of the savings that they were making on their mortgage repayments as a result of the lower rate of interest and were using these savings to make additional payments on their mortgage loans in order to reduce the debt more quickly. Many were also using this surplus cash to repay other debts such as loans and credit cards to unburden themselves from large debt levels.
The BBA said that lenders were also become more active in the mortgage market again, after a particularly turbulent couple of years since the onset of the global credit crisis. Another industry group said that lenders seemed to be opening their doors for business again. Mr Dooks said that many banks were now actively encouraging their mortgage borrowers to pay their extra cash towards their mortgage loan.
He said: “Homeowners are reducing mortgage debt by making, or maintaining, higher repayments using the extra cash generated by lower mortgage rates.”
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