What You Need To Know About Overpaying a Mortgage

21 April 2021

David Lauder, an independent mortgage adviser explains how mortgage overpayments work, and what benefits they could have for you.

How Does it Work?

If you are unaware that almost all mortgages have an overpayment facility available, you’re not alone! Many people do not know this exists. It includes the most popular types of mortgages that offer fixed/tracker rates during the chosen preferential period.

The majority of these mortgages will offer an overpayment facility which means you can choose to pay a large sum or regular overpayments of typically up to 10% of the capital balance per annum during the chosen preferential rate period without any penalty.

The Benefits of Overpaying a Mortgage

The balance will reduce and so will the term if the repayments are maintained. This could result in you potentially saving thousands of pounds in interest over the whole mortgage term as it is a pure capitol payment with no interest accrued to it.

Offset Mortgages

If you feel a 10% overpayment is not enough, there are plenty of other options available. Offset mortgages are a popular choice, you can offset existing savings against your mortgage balance and you will only pay interest on the difference between the two.

No tie-in Products

No tie-in products are another option, this allows you to make unlimited overpayments at any time without any penalty. However, the rates are likely to be higher since they carry additional flexibility on the offset and no tie-in options, so these products benefits depend on how well you intend to use them. 

Is it Worth Overpaying a Mortgage? 

Overall, the overpayment facility is an option that is available on most mortgages but not used enough.

If allowed, it can be a very useful tool as your total interest payable could considerably decrease during the mortgage term, which will result in more money in your pocket. Even if the increase is £50 per month, the results will provide significant savings over the overall term. 

If you need any more advice on mortgages or overpaying your mortgage contact one of our member firms, they are always happy to help!

2021

2020

Tayside housing market back with a bang 2020-12-10 Digital Guide 2020-05-27

2019

The property market across Scotland - Quarter Two 2019 by SPC Scotland 2019-10-16 LORD PROVOST OPENS NEW-LOOK CENTRE 2019-09-17 The Dundee property market 2019-06-24 A 427 MILLION BOOST FOR THE HOMES MARKET 2019-01-21

2018

Budget Proposals to the ADS Rate 2018-12-18 BUYING OR SELLING GET THE FACTS 2018-08-24 BUYING INTO LIFE ON THE WATERFRONT 2018-08-23 As moving day looms dont panic just prep 2018-05-17 THE BEST OF BOTH WORLDS FOR HOMEBUYERS 2018-04-03 HOME COMFORTS FEND OFF BEAST FROM THE EAST 2018-03-07 V&A DATE MILESTONE FOR THE WATERFRONT 2018-03-02 FLAT SALES EDGE TOWARDS £100 MILLION 2018-01-23 PROPERTY SALES PUSH TOWARDS THE £440 MILLION MARK 2018-01-08

2017

FESTIVE GREETINGS FROM ALL AT THE TSPC 2017-12-19 PUTTING DUNDEE ON THE MAP 2017-11-15 TIME TO BRING YOUR HOME TO THE MARKET 2017-11-01 AUTUMN IS A GOOD SEASON FOR SELLING 2017-10-17 HIGH PROFILE OPTION FOR TOP PROPERTIES 2017-10-09 MARKETING YOUR PROPERTY TO THE MAX 2017-08-21 DO YOU LIKE TO BE BESIDE THE SEA? 2017-06-15 TIME LOOMING FOR A RE-MORTGAGE 2017-06-09 HAS THERE BEEN A BETTER TIME FOR A HOUSE SALE 2017-05-26 TIME TO PUT YOUR FLAT ON THE MARKET 2017-05-04

©2000 to 2021 TSPC Holdings Limited and its licensees. All rights reserved. The content on this page is protected by intellectual property laws. Your use of this website is subject to our Terms of Use.

TSPC is the trading name of TSPC Holdings Limited, a limited liability company registered in Scotland No 279747 and Tayside Solicitors Property Centre Limited, a limited liability company registered in Scotland No 279746. The Registered Office of both Companies is 11 Whitehall Crescent, Dundee DD1 4AR.

About | Terms & Conditions | Privacy Policy | Cookies

Design: Plexus Media Ltd, Inverness | DJS Creative Marketing Ltd, Dundee | Credits

TSPC