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What constitutes a lump sum payment?

Hi all

Strange question I know but how much constituents a lump sum overpayment? My mortgage provider only allows overpayments of £500 or more. I rang to make my first "overpayment" last week of £550 but was told I could only make an overpayment that would reduce the monthly payment and if I wanted to reduce the term (which I did) then I would need to go through affordability checks or wait until I had a bigger amount such as £3000.

My Keyfacts statement regarding overpayments says the below and as far as I'm concerned I should be able to make "lump sum" payments of £500+ and not have to endure affordability checks.

"Overpayments are permitted on this mortgage. A lump sum overpayment can only be made by cheque and is any amount that you pay to us in addition to the monthly payment due. When we receive a lump sum overpayment, we recalculate the amount you owe and the amount of interest you pay with effect from the following day. This means you get the benefit of paying less interest straight away. Regular overpayments can only be made by standing order and are amounts that you pay to us each month in addition to the normal monthly payment. When we receive a regular overpayment, we recalculate the amount you owe and the interest you pay from the first of the month after we receive the overpayment. The amount you owe will not be reduced immediately."

Thanks all!
"Everything comes to him who hustles while he waits" Thomas Edison
Following the Martin mantra "Earn more, have less debt, improve credit worthiness" :money:


  • beanieloubeanielou Forumite
    82.1K Posts
    Part of the Furniture 10,000 Posts Mortgage-free Glee! Name Dropper
    If I was you I would phone back & query what they are saying.
    Lou~ Debt free Wanabe No 55 DF 03/03/14.
    **Credit card debt free 30/06/10~**
    MFW. Finally mortgage free February 2021****
    "A large income is the best recipe for happiness I ever heard of" Jane Austen in Mansfield Park.
    ***Fall down seven times,stand up eight*** ~~Japanese proverb.
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  • greentgreent Forumite
    10.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    The Key Facts backs up what you were told over the phone - an overpayment (of any amount) reduces the amount you owe/ interest you pay (ie: will affect your monthly repayment, not term) They are not stopping you making lump sum payments of £500, as far as I can see, just they reduce payment , not term (possibly contained in their t&cs that they only do this without larger payments/ affordability checks)

    You are still getting the benefit of decreased interest with their way. I never had my term recalculated when OPing our mortgage, but my 'required' repayment was recalculated several times.

    If you remortgage at any point you can reduce term then. What you can do (according to Key Facts) is set up a regular OP by STO of the difference between what your payment was originally and what it would be post a £550 OP. You can then keep changing this STO to reflect the change every time you make an OP
    I am the master of my fate; I am the captain of my soul
    Repaid mtge early (orig 11/25) 01/09 £124616 01/11 £89873 01/13 £52546 01/15 £12133 07/15 £NIL
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