Should you increase your mortgage payments where possible?

Yesterday's news that interest payments on mortgages are now at their lowest percentage of household income in 35 years is obviously good news and will take some pressure off stretched budgets in the UK. However, if your mortgage payments are now lower as a percentage of your household income than ever before, is it time to look at increasing your mortgage payments to take advantage of low interest rates?

The simple answer to this question is that if you have significant spare capital then paying down your mortgage will save you money in the long-term. However, mortgage interest rates are relatively low at this point in time but other debt interest rates including credit cards and personal loans are significantly higher. While each and every person will have a different background and a different profile, in a perfect world you should be paying off high interest debt before low interest debt because of the other the added expense this will incur in the long-term.

It is also worth remembering that whether you choose to pay down your mortgage or reduce your credit card balance, you will be unable to recall this money at a later date if you find yourself short of funds. While professional financial advice should be sought at all times, unless you have a buffer i.e. additional savings, you will need to think long and hard about spending all of your savings on reducing your current debts.