HSBC tells customers to overpay mortgages

Date:Friday 23rd January 2009
Author: Rachel Fletcher

Borrowers with HSBC tracker and variable-rate mortgages have been urged by the lender to overpay their loans.

HSBC is contacting 30,000 such mortgage customers to encourage them to pay more than the minimum required each month.

Head of mortgages, Martijn van der Heijden, explained that in four months, rates for tracker mortgage holders have dropped by 3.5 per cent and that borrowers should take advantage of this.

Mr van der Heijden said that overpaying would reduce the time needed to clear the mortgage by years and shave off thousands in interest payments.

In addition, he noted that interest rates will inevitably go back up and that keeping payments high would prevent borrowers having to make sudden changes to their spending habits when this happens.

Cheltenham & Gloucester also recently urged people who can afford to make mortgage overpayments to do so.

Spokesperson Stephen Noakes said that as house prices drop, overpaying would help to protect equity in properties.