An overpayment is any money paid to your mortgage on top of your monthly contractual payment. This is optional and there is no requirement for you to make any additional payments.
You can choose to overpay regularly into your mortgage alongside your monthly direct debit or make ad hoc overpayments using our dashboard.
What are the benefits of making overpayments?
Overpayments allow you to pay down your mortgage faster and ultimately become debt-free sooner. Unlike your monthly committed payments, interest is not applied to overpayments so this means 100% of what you pay goes straight into your equity stake in the property.
The interest saved by making overpayments can be a bigger saving, compared to interest received from any standard current account or cash ISA, due to the mortgage rate being higher. If you are unsure whether you would like to save or overpay, it is best to seek independent financial advice.
Please note, that once you make an overpayment into your mortgage, you will not be able to withdraw those funds.
How does my overpayment impact my mortgage?
When you make an overpayment, we apply this to shorten the term of your mortgage or you can choose to reduce your monthly payment if you'd prefer.
If you would like to reduce your monthly payment, this reduction will not take effect straight away, this will happen when the account is re-optimised. The re-optimisation would take place when you have overpaid by 5%, or on the annual loan anniversary, whichever comes first.
Please follow this link to understand how to make an overpayment.