Lloyds bank encourages mortgage overpayments

In a move which will catch the eye of many consumers in the UK Lloyds bank has revealed customers on variable mortgage rates will be able to overpay up to 20% of their outstanding mortgage loans over the next year. The idea is that more people could take the opportunity to benefit from low UK mortgage rates and effectively reduce their interest payments in the future. It is believed that up to £20 billion in additional finance charges has been saved by UK homeowners who have overpaid their mortgages in the last 12 months.

However, before you decide to make mortgage overpayments in the short to medium term it is vital that you take professional financial advice regarding your specific situation. It is worth remembering that once these overpayments have been made they will not be reversed by the mortgage companies in question and indeed mortgage holders will still be liable to minimum mortgage payments in the future. It may be that you have high interest debt such as credit card balances which could save you more money in the short to medium term if these were repaid in part or fall.

While mortgage overpayments may work perfectly for many people in the UK there may be other considerations to take into account for some homeowners.