Lloyds Banking Group has launched a new scheme that allows all customers with a variable rate mortgage to overpay their mortgages by up to 20% with no financial penalty.

The scheme will last for one year until 31 March 2011.

Recent research conducted on behalf of Lloyds Banking Group by the independent research firm Opinion Matters, showed that around one in four consumers questioned are already choosing to overpay their mortgage. Of those consumers questioned who had already chosen to overpay, 48% indicated that they were overpaying their mortgage to reduce the term of mortgage and 22% said they were overpaying to pay less interest over the term of the mortgage.

The research also revealed that 63% would definitely consider overpaying or increasing their overpayment if they were given the chance to overpay by up to 20% without a penalty.

Stephen Noakes, commercial director of mortgages at Lloyds Banking Group, said: “With mortgage rates at an historic low