7
Feb
Reduce term, mortgage holders advised
Homeowners have been advised to use February's interest rate cut to
reduce their repayment period.
Julia Harris, an analyst at Moneyfacts.co.uk, says reinvesting
savings on variable rate or tracker mortgages could save
£4454.81 on the average £100,000 mortgage with 15 months
cut off the mortgage term.
She warned that a small number of mortgage holders might be
prevented from doing this by lenders, but Moneyfacts figures showed
84 per cent of mortgages permitted overpayments.
"If the interest is charged daily or monthly and you overpay every
month, you will see the amount you overpaid come off your mortgage
as you pay it," she said.
The Bank of England's monetary policy committee (MPC) voted to
reduce the base interest rate from 5.5 per cent to 5.25 per cent on
February 7th, citing the necessity to meet the inflation target of
two per cent.
Higher food and energy prices were a factor in the MPC's decision,
it stated.
