Rising interest rates have left many homeowner worrying about mortgage payments
Martin Lewis(Image: ITV)
With mortgage costs continuing to rise for families, Martin Lewis has delivered some crucial advice which could save homeowners money. Thousands of homeowners are worrying about spiralling mortgage costs as interest rates continue to rise and it’s placing an added burden on families amid the cost of living crisis.
Now consumer expert Mr Lewis has recommended a way homeowners could save money on their mortgages in the long run. For those who can afford to, he has suggested overpaying while interest rates are high.
He explained how overpaying is “effectively a tax-free saving at the mortgage rate” and how overpaying, for those who can by using spare cash or savings, can save on interest. It’s expected the Bank of England will raise interest rates yet again today with inflation remaining stubborn, putting pressure on more households.
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Mr Lewis said on his moneysavingexpert website: “New fixed-rate mortgage deal costs are rising rapidly, as lenders believe UK interest rates may now peak at nearer six than five percent. Most have already factored in the Bank of England’s likely 13th consecutive rise due this Thursday – the cheapest fixes are roughly 1% point higher than in April (c. £50/mth more per £100,000 mortgage).”
He continued: “The simple rule: if your mortgage rate is higher than you can earn in savings, overpaying adds up. After all, £10,000 saved at 3% earns £300 for the year, yet use it to overpay a 5% mortgage and it reduces costs by £500 over the same period.
“Overpaying is effectively tax-free ‘saving’ at the mortgage rate. Yet remember, millions of savers are being ripped off earning diddly-squat.” Mortgage worries have led to calls for the Government to do more to help homeowners, though Chancellor Jeremy Hunt stated this would only drive up inflation further.
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