Mortgage overpayments 'can help protect equity'

Taking advantage of the low base rate and overpaying a mortgage can help to secure the equity in a property, it was suggested this week.

Council of Mortgage Lenders (CML) spokesperson Bernard Clarke explained that falling house prices may well have an effect on equity.

And during the next couple of years, overpaying could protect equity that would otherwise decline due to the current financial climate, he said.

Mr Clarke also said overpaying a mortgage can help unlock better choices for the homeowner.

"It is also an opportunity for interest-only borrowers to consider switching to a capital repayment model which will help them in the longer term," he remarked.

According to the CML, the number of outstanding mortgages in the third quarter of 2008 was 11.69 million, compared to 11.74 million in quarter two and 11.77 million in the first one.

Now may be a good time for people to benefit from the low rate of interest, which was reduced at the beginning of this month to 1.5 per cent.

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