John Charcol: Bonuses can cut mortgage costs

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John Charcol: Bonuses can cut mortgage costs

Tue 30th Jan 2007

In the new year, the UK witnessed record bonuses being dished out in the city and as a result, accountant John Charcol has recommended that mortgages are lowered.

Mortgage holders are encouraged to visit John Charcol's website, utilising the mortgage calculator in order to gain a better insight into modes of overpayment.

Early Repayment Charges (ERCs) are added by some mortgage providers in the event of customers deciding to pay off their loan quicker than agreed. However, this is not always the case and people should investigate, John Charcol urges.

Katie Tucker of charcolonline said: "Most borrowers will have the ability to overpay their mortgage without incurring any [ERCs] and some may not be aware of this.

"The most common amount which can be overpaid, without incurring ERCs, is ten per cent per annum, but some lenders allow unlimited overpayments, which means that in most cases a large chunk of the mortgage can be overpaid."

There can be large savings to be had, according to Ms Tucker, who says that the flexibility of some mortgage products enables the customer to keep bonuses "parked in the mortgage" which will save them interest charges.

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