Overpayments & underpayments.

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

Your home may be repossessed if you do not keep up repayments on your mortgage.

What are they?

Regular overpayments are amounts you pay that are extra to your monthly mortgage payments. 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.

Overpayments will not automatically reduce your mortgage term because whenever we recalculate your monthly payment, your overpayments go towards reducing your new payment.

You may want to make regular overpayments to pay off your loan sooner but don’t want to ask us whether you can formally change the term of your mortgage agreement. If so, you will need to remember to review the amount of the monthly payment whenever we recalculate it, and increase the amount of your regular overpayment.


How do I make regular overpayments?

You can make regular overpayments by increasing the amount of your monthly payment. You can do this by asking us to increase the monthly direct debit we collect from your bank account.


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.

Lump-sum overpayments

What are they?

Lump-sum overpayments are when you pay off part of your loan using a one-off payment.

How do I make one?

You can call into your local branch or write to us enclosing a cheque. You need to tell us if you want us to use the money to reduce the monthly payments by keeping the mortgage term the same. If you would like to permanently reduce the remaining mortgage term you will need to speak to a qualified mortgage adviser, who'll discuss your needs and circumstances with you.

If you've an interest-only mortgage, you can ask us to reduce the mortgage term but only if you can show us that your repayment plan(s) to repay the loan at the end of the term will provide enough money to do so sooner.

Making a lump-sum overpayment will reduce the amount of interest you will pay us over the life of the mortgage because you are reducing the amount you owe. We'll stop charging you interest on the amount of the lump-sum overpayment on the day we receive the money.


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?

You can tell us which part of your loan you want us to repay with your lump-sum. For example, you may want us to reduce the part we charge at the highest interest rate, or 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 reduce each part of your loan in the same proportions as we apply your full monthly payments.

Underpayments

What are they?

An underpayment is where you pay less than your monthly payment. You're not allowed to make underpayments unless you have already made overpayments.

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.