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Borrowers on variable rate mortgages told to pay off early

11/02/2008

Borrowers on variable rate mortgages have been told to make repayments more efficently, even with interest rates on the fall.

John Charcol suggested that borrowers should deposit as much as possible simply to bring down repayments. If homeowners decide to remortgage to a better deal in the future, this will enable them to more opportunities and better rates.

Katie Tucker, of Charcol.co.uk commented: "For many people, the mortgage is what dictates when you can retire. The Bank of England cut the base rate of interest from 5.5 per cent to 5.25 per cent last week, following a similar 0.25 per cent cut in December.

"However, borrowers which have been able to afford these mortgage payments over the last year should consider keeping them at that level now, because whatever isn't paying interest will pay off the capital instead, reducing your term."

Members from the Charcol firm predict that the base rate will drop to 4.5 per cent by the end of 2008. This may allow house prices to increase.


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