Homeowners who would like to pay off their mortgage early have been urged to consider using their annual bonus to reduce their overall mortgage commitments.
This year, people working in the City received record bonuses, while many people across the UK may also have received performance-related add-ons to their normal salary.
And internet banking service Charcolonline, which offers information on services such as mortgages and personal loans, has highlighted the potential savings that can be made by putting the windfall towards a mortgage debt.
For instance, the online banking financial services provider points out that a person with a £200,000 mortgage who pays in a bonus of £15,000 can save a total of £26,500 and cut more than three years off their mortgage.
However, Katie Tucker of Charcolonline has pointed out that some homeowners may be penalised for exceeding the agreed mortgage repayment, while others may demand an early repayment charge only for large sums of money.
"The most common amount which can be overpaid, without incurring ERCs [early repayment charges] is ten per cent per annum, but some lenders allow unlimited overpayments," she explained.
Earlier this month, recruitment agency Joslin Rowe predicted that bonuses in the financial services sector will see year-on-year growth of 12.3 per cent.
Homeowners urged to invest bonus into mortgages
Mortgage Quote Line
0845 108 0505
Homeowners urged to invest bonus into mortgages
Tue, 30 Jan 2007
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