“Borrowers worked hard to live to a tighter budget last year, and now that bank rate has started falling, just keeping their mortgage payments up at the level they are now used to, they could reward themselves with an early finish to their mortgage,” says company spokesperson Katie Tucker.

It recommends that customers make overpayments in order to reduce the number of years left to pay on their mortgage deal. Ms Tucker points out that: “For many people, the mortgage is what dictates when you can retire.

“By paying it off even a few years early it can make a difference to your quality of life not only because of age, but because of the money you free up to spend on other things.”

Many homeowners struggled with mortgage repayments after the five interest rate hikes introduced between August 2006 and July 2007. “Base increased from 4.5 per cent to 5.75 per cent, taking the typical monthly payment for a variable £100,000 repayment mortgage from £555 to £629,” Ms Tucker reveals.

However, she suggests that those who have coped with the higher rates should continue to do so, as this will ensure that more capital is being paid off. Most lenders will allow customers to overpay between £500 and 10 per cent of the outstanding debt, without any charges.

“For example, if you maintain the payments of £629 p/m that you paid on £100,000 of debt at 5.75 per cent, but your rate has moved down to 5.25 per cent now, £30 of it is extra, and chips away at the capital. If continued, this pays your mortgage off two years early,” she says, adding that: “Many economists predict that interest rates will fall as low as 4.5 per cent again by the end of 2008.

“Making this little overpayment reduces your capital, and with property value rumoured to be falling in many places this year, repaying debt is the must-do for 2008 to minimise any risk of negative equity.”

© Fair Investment Company Ltd