1 Feb

Paying off a debt is better than saving

Paying off a debt is better than saving

People with mortgages would do better to overpay on their mortgage if they have disposable income, as opposed to paying their money into a savings account, according to one expert.

Paula John, editor-in-chief of Your Mortgage, said that there is far more benefit to paying off a mortgage earlier, as opposed to putting money into the back, because it is more "cost effective."

"Fortunately, over the last couple of years, more people have overpaid than before. People who can afford it and have got spare cash, have been taking advantage of overpayments because interest rates are very low," she added.

Last month, the Halifax said that people are currently paying less per month on their mortgages than they have been doing since 1997, and it also reported this week that the average amount paid back per month had now dropped to £600.

This figure represents a five per cent drop in buying costs over the past year.ADNFCR-1222-ID-801281489-ADNFCR

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