Additional research, carried out on behalf of The Co-operative Bank Mortgages, also reveals people's motivations behind making overpayments. The findings show that the vast majority (80%) of those people currently making overpayments are doing so because they feel it makes financial sense, due to the low return on savings rates at the moment.
The results also highlight that over a third of people are paying off extra on their mortgages because their rate has fallen due to falls in base rate (37%). And almost one in 10 people making overpayments are hoping to secure a better mortgage deal, by increasing the amount of equity in their homes (7%).
Conversely, the findings also reveal, why some people are not currently overpaying on their mortgages. Apart from lack of income, almost a third of those not overpaying would prefer to put their money into savings (29%) and a quarter of people are spending any excess money they have on holidays and clothing (24%).
Furthermore, the research also shows that a fifth of people (21%) believe they will get a better return on their money elsewhere, the same number of people do not trust the housing market (21%) and almost a fifth are using any spare income to save up for a special occasion (19%).
Terry Jordan, Head of Mortgages at The Co-operative Bank, comments: "Our internal data has shown a 50% increase in our mortgage customers making overpayments. It would appear that with interest rates now at an historic low, customers are recognising more than ever the benefits of making overpayments. Providing their mortgage allows the flexibility to overpay, at the current time it can make real financial sense for customers to make even small monthly overpayments, as these can really add up to a large difference over the lifetime of the mortgage."
For example someone with a 25 year mortgage of £100,000, making overpayments of £50 a month could knock 3.6 years off the term of the mortgage and save £12,000 over the term of the mortgage.
All mortgages provided by The Co-operative Bank include a range of flexible features, including the facility to make overpayments without penalty, and the flexibility for customers to be able to borrow back their overpayments at any time.
