Overpayments - any magic

snezhinskproject

Hi,

I am looking to make a one-off lump sum payment toward my mortgage.

Is there any magic to this, i.e. do I need to state that it is toward repayment of the capital rather than interest? Or do I simply say 'please apply this to repayment of my mortgage'? Obviously I am keeping up with my standard monthly repayments.

[NB I have checked things like the maximum I am allowed to overpay per year, and also the date from which any overpayment will be applied to my account/interest calculations.]

Many thanks.

RedSoleShoes

It would come off the capital however, you would need to let them know that you wish to continue paying the same monthly payment otherwise, the reduction in capital will reduce the overall interest and therefore your monthly payment would be recalculated and reduced.

So you just need to make clear that you wish the monthly payment to continue as it is.

alexlyne

We have just put a lump payment into our mortgage, one that has half at a fixed rate (6.xx%) and half at SVR (3.5%). We arranged that the lump sum would go against the capital which attracts the highest interest payments, and then telling them that we wanted the term reduced rather than future payments reduced.
Otherwise, no magic involved. Your regular payments are paying off the monthly interest accrued, so therefore it makes sense that any additional payment must be towards the capital

TrickyDicky

When you make an overpayment, it all goes on capital. Interest does not sit around in your account for 25 years, it builds up daily from the outstanding balance on the mortgage. Your monthly payment takes care of all interest (and some of the capital if you have a repayment mortgage). You cannot chose to pay off interest, as it doesnt really exist as a debt if you're up to date.