Overpaying your mortgage — even by a small amount — can make a significant difference over time. Because mortgage interest is usually calculated daily, reducing the balance early means you pay less interest overall.
You can overpay in two ways:
- Ad hoc lump sums
- Increasing your monthly direct debit
Both approaches reduce the outstanding balance faster and shorten the mortgage term.
However, it’s essential to check your product’s overpayment allowance. Most lenders allow up to 10% of the outstanding balance per year without penalty, but some have different limits or monthly caps. Exceeding the allowance can trigger an Early Repayment Charge (ERC), which can be costly.
We can review your current product, explain your allowances, and show you how different overpayment strategies could reduce the total cost of your mortgage.
