Make your mortgage your New Year Resolution?

December 30, 2009 by Brendan

News

Paying off the mortgage would be a New Year Resolution many would love to have and achieve, and with interest rates so low, 2010 could be a year when many borrowers get much closer to this goal, far faster than they thought.

Only a week ago, the Times Online featured a case study of a recruitment consultant in Birmingham, Nicola Daglish, and her fiancé who were overpaying their mortgage by an additional £250 in order to take advantage of the current low interest rates. Ms Daglish was of the firm opinion that interest rates would rise in 2010 and they naturally wanted to be prepared. The same article also discussed how Ms Daglish was trying to repay her interest-free personal loan as quickly as possible in order to avoid finding herself in a tight situation as interest rates rise.

Naturally there are also people who believe interest rates will stay low for some time yet and are taking advantage in a different way – using the extra money to enjoy themselves, have the holiday they have always wanted or pay a few bills.

For those interested in making overpayments on their mortgage, they should get in touch with their mortgage lender to check the terms and conditions of their mortgage. Most flexible mortgages allow a certain level of overpayment – some are unlimited and others are capped at, for example, overpaying no more than 10 per cent of the mortgage in any one year. Making overpayments can significantly reduce the term of a mortgage, as those studying for their CeMAP or CeFA will see, so perhaps making an overpayment could be your New Year’s Resolution.