DFW to MFW

I'm "lucky" enough to be being made redundant, so my plans for "debt free wannabe ness" are being somewhat hampered by having a big cash pay off to knock them all on the head with.

So, assuming I walk into another job, I'm moving onto being a "mortgage free wannabe".

A Brief Statement of Affairs
House Price £85000
Mortgage £76500
Date Aug 07
Payments since then have been £360 ish interest per month, nothing on capital.

I'm also owed a sum of money, so will have roughly £6500 left over when my inlaws sell their home, minus what I spend between finishing and starting work, and other bits and bobs.

My partner wants to move to a "nicer" area, and I have said that in order to move, she has to prove we can meet the higher mortgage costs for a year first, and I've set this target at £900 per month out of a combined take home of £2400 per month, I forsee few problems meeting that, minimum debt repayments are currently £250 per month, (£610 inc Mortgage interest) and we've comfortably overshot that.

I'm a bit unsure of how the "overpayments" work though.
Even then you can pay up to 10% of the amount on that product in any 12-month rolling period free of charge*

Thats the exact text.
Now, thats fairly clear, I can repay £6500 tomorrow, because I've made no over payments for the last year.
But what then?
Does the "amount on that product" reduce to £70,000 or does it stay at £76,500?
If it reduces to £70,000, I cant make the next £900 payment without going over the 10% in a rolling 12 months.

That was a bit of a ramble sorry, anyway....
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