Many UK Homeowners will have found their mortgage payments have halved in the last few months due to Bank of England base rate reductions. This is obviously good news for mortgage holder (but bad news for savers) so what should they do now?
There are two options to consider here. The first is overpayments. These circumstances are not normal so don’t get used to the current mortgage payment. The payments you were making a year ago were normal so if you can, you should try to overpay now up to the equivalent of your mortgage payment last year. The second option is more about helping the economy. We’re in recession at the moment and the best way to get out of a recession is to spend money which keeps the general economy going. You could use you excess monies to fund home improvements. Now is not a great time to sell so it might be a better time to improve not only for your home’s future investment value but also for your immediate quality of life.
In a recession everyone is worried and has good reason to be, but try and thing long term as well as short term. You need to keep on paying your bills now and savings are a good idea. The one aspect about the current set of circumstances which is worrying is that people might get used to the current interest rates and think that they are normal. They are not normal and one day soon interest rates will go up again and so too will your mortgage payments. Try and budget for this now rather than later.
