If you choose to pay more than your minimum monthly mortgage payment or pay off a lump sum you can reduce your outstanding balance and save money in interest payments. Overpaying could also allow you to fully repay your mortgage prior to the end of your mortgage term.
Depending on your mortgage product, there may be restrictions on the maximum amount you can overpay, either by regular overpayments or as a lump sum, in one year without incurring an Early Repayment Charge (ERC). You can usually repay a fixed percentage of your original mortgage balance per year without charge. For more details, see your mortgage offer or call us on 0345 850 1711.
Lump Sum overpayments:
These are payments made in one transaction, that are not included in your contracted monthly payment.
It’s important to note that overpayment may lead to your contractual monthly payment being recalculated.
The level at which we automatically recalculate payments may change. This is covered in our Tariff of Mortgage Charges which we’ll send with your Annual Mortgage Statement.
If you make a payment that is 6x your monthly payment amount or £2,000 and above (whichever is lower):
We’ll recalculate your contractual monthly payment to reflect the lower balance and remaining term. If you’d like to keep your mortgage payment the same then this will affect your overpayment allowance, so please get in touch to discuss your options.
If you make a payment that is less than 6x your monthly payment or less than £2,000:
We won’t recalculate your monthly payment unless you ask us to, but your mortgage balance will still reduce and the interest we charge you will reflect this. Please note, any lump sum payments you make will build as a credit to your mortgage account but would not cause an immediate recalculation unless an individual payment was greater than £2,000 or six monthly mortgage payments as outlined above.
Regular overpayments:
- At your request, your Direct Debit can be increased so an overpayment is collected each month alongside your minimum monthly payment. All monies collected in excess of your monthly payment will count as an overpayment towards your mortgage
- These payments reduce your balance
| Regular overpayments example |
| Mortgage amount: |
£100,000 |
| Remaining term: |
15 Years |
| Interest rate: |
5% |
Minimum monthly payment
(capital & interest): |
£789 |
| Monthly overpayment of: |
£100 |
| Interest saved: |
£7,231 |
| Balance repaid 2 years and 4 months before the mortgage term ends |
With both overpayment types listed above, there are some situations that may prompt an automatic recalculation – such as an interest rate change.
If this happens then we’ll include any overpayments you have made in the recalculation, which will ensure your new contractual monthly payment reflects your remaining balance and term. We’ll get in touch if this happens.
Mortgage overpayments calculator
Our mortgage overpayments calculator allows you to see the difference that could be made to your mortgage by making regular overpayments.
Complete the form below and select calculate. We will then illustrate what your monthly payments could be, the amount of interest you could save and any reduction in your mortgage term. We will show illustrations for both a repayment mortgage and an interest only mortgage.