Lloyds says the scheme, which runs from March 2010 to March 31 2011, will allow customers who have the ability to make higher monthly repayments, the opportunity to take advantage of the current low interest rate environment. The new overpayment allowance is double the previous limit of 10 per cent.
Brokers have welcomed the move. First Action Finance head of communications Jonathan Cornell says it is a “positive step forward” while David Hollingworth, head of communications at London & Country, says the flexibility is welcome.
Hollingworth adds: “It will help borrowers when rates start to rise and will make life that much easier. As mortgage products are driven by the level of equity in your home, if you can push the mortgage balance down – with property prices having become more stable – then that is improving your loan to value position.”