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Overpayments & underpayments

There may be times when you want to pay more or less than your monthly payments.

  • Lump-sum overpayments

    What are they and how do I make one?

    • You can make a one-off lump-sum overpayment by making a separate payment.
    • You can do this by calling into your local branch or by phone; where we’ll ask if you want us to work out a new monthly payment on your reduced balance.
    • You can also make a one-off payment online, but we will not automatically recalculate your monthly payment. If you would like us to work out a new monthly payment please contact us.
    • Even if we don’t work out a new monthly payment for you, we will reduce the interest we charge by calculating it on the reduced balance.
    • We will share any lump-sum overpayments received across all parts of your mortgage, unless you ask us to apply the payment to a specific part of your mortgage.

    Will there be a charge for making a lump-sum overpayment?

    You may have to pay an early repayment charge if you are making a lump-sum overpayment during an early repayment charge period. Your Mortgage Illustration and offer letter will tell you if early repayment charges apply and how long for. After the first year of your mortgage your annual statement will tell you this.

    If we have an early repayment charge concession when you make your lump-sum overpayment, you'll have to pay an early repayment charge on only the part of the lump sum that exceeds our concession limit.

    Remember: if you make regular overpayments during the year, these will count towards any early repayment charge concession.

    Can I choose which part of my loan I repay?

    Yes. If you make a separate lump-sum overpayment, you can choose which part of your loan you want the payment applied to, but only if you are up to date with your monthly payments on each part of your loan.

    • You may want us to reduce the part we charge at the highest interest rate, or;
    • You may want to reduce the part that does not have an early repayment charge on it.

    If you don’t tell us which part of your loan you want to repay, we'll share it across all parts of your loan in the same way we share your total monthly payments.

    Worked example

    The total monthly payment is £600 and is split into two parts:
    Part 1 is for £360 (60% of the monthly payment)
    Part 2 is for £240 (40% of the monthly payment)

    You make a lump-sum overpayment of £10,000
    Part 1 would receive £6,000 (60% of the lump-sum)
    Part 2 would receive £4,000 (40% of the lump-sum)

  • Underpayments

    What are they?

    An underpayment is where you pay less than you owe for your monthly payment. You must not underpay on your mortgage unless you have our permission and you have previously made overpayments of the same or greater amount.

    Whenever we recalculate your monthly mortgage payment, we use any overpayments you have made to reduce what you owe. Once we have done this, you will need to build up new overpayments before you can underpay again.

    If I want to underpay, do I have to make arrangements with you?

    You should contact us to arrange to underpay so that we can tell you the amount of overpayments available for you to use. We can then change your direct debit for the time you want to underpay.

What are they?

An overpayment is when you choose to pay more than your regular monthly payment. They reduce the amount you owe on your mortgage. They also reduce the amount of interest we charge because we calculate interest on the reduced balance from the day we receive the overpayment.

How do I make regular overpayments?

  • You can make regular overpayments by increasing the amount you pay each month.
  • You can do this by asking us to collect an extra amount each month along with your monthly payment.
  • We will share any extra amount received across all parts of your mortgage.

Will overpayments reduce my term?

No. Overpayments will not reduce your mortgage term. Whenever we recalculate your monthly payment, we will use the reduced balance which includes your overpayments to work out the new payment over your existing term.

If you want to use regular overpayments to repay your mortgage sooner, but don’t want to formally change the term of your mortgage agreement remember:

  • Any recalculation of your monthly payment will include the previous overpayments. This means that if you only pay the new monthly payment, your loan will be repaid over your existing mortgage term.

If you would like to permanently reduce the remaining mortgage term, you will need to speak to a qualified mortgage adviser who will discuss your current and future plans with you.

Will there be a charge for making a regular overpayment?

You may have to pay an early repayment charge if you are making an overpayment during an early repayment charge period. Your Mortgage Illustration and offer letter will tell you if early repayment charges apply and how long for. After the first year of your mortgage your annual statement will tell you this.

If we have an early repayment charge concession when you make your overpayment, you will pay an early repayment charge on only the part of the overpayment that exceeds our concession limit.

Bear in mind that if you make any lump-sum overpayments during the year, these will count towards your 10% early repayment charge concession.