Overpayments section in KFI

tigerminxy

In the Key Facts Illustration (KFI) I've got for a mortgage, there's a section headed 'What happens if you want to make overpyaments?'. It says, 'You can make overpayments below £1,000. For amounts above this, early repayment charges may apply (see section 10 above). Any overpayment made will cause the amount upon which interest is charged to be reduced at the month end.'

Does this mean I can overpay by up to £1,000 each month, each year, for the whole term, or what? I see the reference to 'month end', so does that imply the £1,000 figure relates to each month?

KentishLady

I would read that to mean any individual payment of less than £1000 (even if you make more than one in a particular month) will be treated as a payment and will not incur an early repayment charge.

Any overpayments made which are greater than £1000 will be treated as a partial redemption/part payoff and may incur an early repayment charge (depending on what section 10 says).

Either way, whether early repayment charges are incurred or not, at the month end the balance on which interest is charged will be reduced by the amount of the overpayment (less any early repayment charges).

To be honest though, if you are unsure of the precise meaning of this section (or any other) in the KFI you need to be speaking to the mortgage adviser who sold you the mortgage to explain this to you.

sarkin

I would call your lender or broker, they will clear things up for you. A lot of lenders normally allow 10% per annum for overpayments.