Lloyds encouraging consumers to overpay on their mortgage

Lloyds Banking Group has launched a new scheme allowing all homeowners to overpay on their mortgage by up to 20 per cent without incurring a penalty charge.

The bank says it will run the scheme for one year, as it aims to help consumers capitalise on the current low interest rate environment.

Recent research conducted by Lloyds indicates that a quarter of homeowners are currently choosing to overpay on their mortgage.

Some 48 per cent said they are doing so to reduce the term of their mortgage, while 22 per cent revealed their motivation was to pay less interest.

Stephen Noakes, commercial director of mortgages at Lloyds Banking Group, commented that the average mortgage repayment has dropped by around £188 per month as the Bank of England's base rate has remained at its historic 0.5 per cent low.

"Customers have a choice to make to gain maximum advantage from the extra cash in their pocket," he stated.

In related news, Britannia and The Co-operative Bank have jointly launched a new five-year capped mortgage deal designed to protect against the impact of rapid interest rate increases.

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2010-03-17 12:11:39 © Moneyextra.com