How to make additional payments and take years off your mortgage.
How does it work?
You can significantly reduce the total amount of interest you pay on your mortgage and potentially knock years off your loan by making overpayments. This is done by paying a bit extra in your usual monthly payment, or by making occasional lump sum payments on top of your monthly payment.
Whether or not these options are available to you will depend on the mortgage deal you have selected.
By overpaying on your mortgage payments, any additional payments you make will immediately reduce your overall mortgage balance and therefore the amount of interest being charged will also reduce. This can help reduce future payments and may mean that you can pay off your mortgage loan sooner.
You may make overpayments either as a lump sum or as regular additional payments. Overpayments will be credited to your account on the same day, therefore reducing your account balance straight away. Because interest is charged daily, you will gain an immediate reduction in your interest charges. If overpayments are made by cheque, however, they will not reduce the balance until the cheque has cleared.
Why it could work for you
- You can start to reduce your mortgage balance, meaning you could potentially pay off your mortgage sooner.
- As savings rates are currently low, the amount you would save on your mortgage interest can amount to more than you would otherwise earn in savings interest.
Things to be aware of
- Early Repayment Charges may apply if you decide to make overpayments, depending on the mortgage deal you are on.
- The amount you can overpay each year depends on the mortgage you are on. Please refer to your product factsheet and mortgage offer for full details of overpayment restrictions and Early Repayment Charges.