Lloyd Banking Group has today launched a new scheme that encourages customers to overpay mortgages by up to 20 percent without any penalties or charges. The scheme will be operated up to 31st of March 2011 and is designed to let customers take advantage of the current low mortgage rates. Mortgage payments (principal plus interest) accounted for 32 percent of average take-home pay in the fourth quarter of 2009 against 47 percent in the fourth quarter of 2007. This means that the money is left with customers after mortgage payments has increased by 15 percent.

The independent research company opinion matters has carried out research on behalf of Lloyd's shows that one out of every four samples in the survey is already overpaying mortgage. Of these, 48 percent said that they were overpaying to reduce the term of the mortgage while 22 percent said that they were overpaying to reduce the burden of interest payments over the term of the mortgage.

Stephen Noakes, director of mortgages for the group, said "With mortgage rates at an historic low, there has never been a better time for the majority of people to overpay their mortgage. The average mortgage repayment has dropped by around £188 per month. And those on tracker mortgages have done even better - on average they are just over £400 a month better off. Customers have a choice to make to gain maximum advantage from the extra cash in their pocket." "We are seeing our customers behaving very rationally. A number of whom are not necessarily banking the reduction in their interest payments but are actually using that to pay down their interest. This is a very positive move. Not only can it help customers shave interest off their mortgage, it also means less of a payment shock should interest rates begin to move back up

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