Making overpayments

Making overpayments can be a great way to improve your financial position. Each overpayment reduces your mortgage balance and therefore the interest you are charged over the term of your mortgage. Even small overpayments can add up and make a big difference to the total amount of interest that you will pay.

If you can't afford to make regular monthly overpayments, you can always just do this as and when you want to. For example by using rental surplus, or spare cash following the sale of another property.

See the effect on your mortgage

Use our Overpayments calculator to illustrate the positive effect making overpayments can have on your mortgage. Simply enter your mortgage type, the outstanding balance, current interest rate, remaining term and the amount you think you can afford to overpay. Whether it’s monthly or a one off payment, you might be surprised how much difference it makes.

Please note - the calculator assumes your current interest rate will remain the same over the remaining term of your mortgage. In reality, interest rates could rise and fall and this will affect the amount you overpay.

To start making overpayments now, or for more information, please contact us.

Here are a range of Frequently Asked Questions about mortgage overpayments:

How does it work?

You can make unlimited, penalty-free overpayments in the form of a lump sum or a regular overpayment each month, provided that the mortgage is not redeemed in full.

Depending on your mortgage, you may be liable to pay an Early Repayment Charge (ERC) if you make an overpayment. However, we are currently waiving all ERCs until further notice, so you won't have to pay this fee at present, even if it would usually have applied.

When does an overpayment take effect?

Your outstanding balance and the interest charged will be recalculated from the first day of the following month following our receipt and processing of an overpayment.

Are there any tax implications?

Some landlords have told us that they are reluctant to overpay their Buy-to-Let mortgage as it will mean paying extra tax.

However you will only need to pay more tax if you’re making larger profits, and remember that your portion of the profit will always be larger than that you give to the tax man. And overpaying your mortgage reduces the total amount of mortgage interest you will pay overall.

How much should I overpay by?

While there are clear financial benefits to overpaying your mortgage, you should not overpay more than you can afford. If you have other outstanding debts, like credit cards or personal loans, consider if it would be better paying these off first – especially if the interest rate being charged on them is higher than your mortgage. If you have any queries, we recommend you speak to an independent financial adviser.

Choices facility

You may also be eligible to use our specific overpayment facility called Choices that can potentially give you a number of flexible options in the future. If you are, it will be mentioned in your original mortgage offer.

Find out more about Choices.

Next steps

We offer a range of different overpayment options. To find out which one could be best for you, please contact us.