Borrowers are trying to get into the black by repaying mortgages faster than ever before. In the last quarter of 2010 the Bank of England reports that £7bn extra repayments were made to reduce debt and balance future spending. This reduction in debt is the largest since bank records began in 1970.
Reasons for reducing overall mortgage levels
- An attempt to improve personal balance sheets. This is thought necessary given high debt levels and uncertainty over the economic situation.
- Take advantage of very low interest on savings so spare cash is redirected to credit card loans and mortgages.
- Reduction in mortgage interest rates often left the same repayment to reduce the length of the mortgage.
- Increase the amount of equity in the property to qualify for lower mortgage interest rates.
- Not topping up mortgages with more borrowing reduced the overall mortgage debt.
- Tighter borrowing conditions and falling house prices made it harder to withdraw equity.
Tips for Quicker Mortgage Repayment
- Consider an offset mortgage
- Made lump sum repayments when you can afford to do so. Check that there are no penalties or extra charges.
- Bringing forward your regular payment date one month or even a few days can help.
- Maintain repayment levels when interest rates go down or increase repayments when you can afford to do so.
- Negotiate the best interest rate with your existing lender.
For more ideas on How to pay off your mortgage quicker read Mortgageguide.co.uk
