If your mortgage is with us, you can make a mortgage overpayment by cheque, or electronically by BACS transfer. If you need more information, please call us on 0121 557 2551 or complete our online contact us form.
What is a mortgage overpayment?
A mortgage overpayment is where you choose to pay back more than your committed monthly repayments. This can be as and when you wish, or a regular overpayment.
Can I make mortgage overpayments?
You should check your mortgage product terms and conditions before you make an overpayment. Many mortgages will have Early Repayment Charges. This means that the lender will limit the amount you are able to overpay, if you exceed this limit you may incur Early Repayment Charges.
Benefits of mortgage overpayments
Making overpayments can help to reduce the amount of interest you pay back on your mortgage. It can also help you to pay your mortgage off sooner, so become mortgage free quicker!
While you can do this by reducing your mortgage term, an overpayment is not a set commitment, meaning that if you decide you wish to just pay your normal monthly repayment for a period, this is ok. However, if you lower your mortgage term the higher monthly repayment will be a commitment and must be paid regardless.
Calculating a mortgage overpayment
If you would like to know how much you can overpay on your mortgage, you can call your mortgage lender for an exact calculation.
However, if you wish to work this out yourself, you will need information regarding the fee structuring. For example, if you are able to overpay 10% of the amount owed each year, you will need to multiply the amount you owe by 0.1.
Examples of mortgage overpayments
Examples of calculating your mortgage overpayment are below:
You owe £100,000, you are able to overpay 10%. £100,000 x 0.1 = £10,000
You owe £100,000, you are able to overpay 5%. £100,000 x 0.05 = £5,000
You owe £250,000, you are able to overpay 10%. £250,000 x 0.1 = £25,000
You owe £250,000, you are able to overpay 5%. £250,000 x 0.05 = £12,500