Paying off a mortgage 'more cost-effective than saving'
1st Feb 2012
It is more cost-effective for UK property owners to pay off their mortgage, rather than plough their money into savings, it has been advised.
Paula John, editor-in-chief at Your Mortgage, said that although there has been an increase in the number of people overpaying their mortgage, more homeowners should look to take advantage of the current low interest rates.
Her comments came after First Direct recently reported that 42 per cent of UK mortgage holders are saving regularly, which is double the proportion that regularly overpay on their mortgage.
The data showed that almost a third of people do not know the interest rate on their mortgage, 43 per cent are unaware the total cost of their mortgage including interest, and a quarter do not know whether or not they are able to overpay on their mortgage.
Ms John said it is "very concerning" that people are not aware of their mortgage arrangements, as mortgages are usually most people's major monthly financial commitment.
She explained that, over the last couple of years, more people have overpaid than before, with those who can afford it taking advantage of overpayments because interest rates are very low.
"More people have been overpaying, but still not enough; it doesn't actually make sense and doesn't add up for you to be putting money into a savings account and not using it to pay down debt instead. It is simply a more cost effective thing to do," the expert commented.
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