Overpayment Charges

quantic

Hi everyone, I was wondering if someone could explain the ins and outs of overpayments to me as I do not fully understand it.

I took out my mortgage over 30 years, (thought this would be the safest option to begin with as I am a first time buyer). I am confident that I will be able to afford around £200 a month more than my current monthly payments but I am not sure how much I will be charged for doing this.

My mortgage states:

Early Repayment Charge
3% of outstanding loan before 28/02/2012, 2% of outstanding loan next year, 1% of outstanding loan next year

Thanks

CathT

Hi,

I think others would probably be able to explain it better than me but from what I gather you need to check what overpayments your mortgage allows. This is different to an early repayment charge which would probably apply if you came out of fixed rate etc.

You can see what difference your overpayments will make by using the calculator on this site.

On your mortgage paperwork it should specify what overpayments are allowed. Some have a monthy restriction whereas others allow 10% of balance to be overpaid annually, often depends who your mortgage is with.

Hope this helps

Cath

quantic

Thanks for the reply. I couldn't find anything on their website. Will check the paperwork tonight. The mortgage is with Britannia and is a 3 year tracker.

dimbo61

Just had a quick look on the britannia building society website and it states you are allowed to overpay 10% of the outstanding balance each year from the figure outstanding on the previous year end balance!
So please check with your lender but I guess you wont be paying more than 10% this year
Good luck