Mortgage overpayment question

jumperabv3

On March 2020 I took a mortgage for £250k + £2k fee to take the mortgage (£252k in total).
Currently there is a direct debit of around £1,250 taken from the account every month and in addition to that I'm allowed to make overpayments of 10%.

I called the lender about 1.5 months ago asking how much I can overpay this year and they said £24,600.
Initially I wasn't sure if I would overpay this or not this year but so far I've overpaid £15,110 so I'm hoping to reach £24,600 before March 2021 but I don't want to go over that amount because then I'd have to pay a 5% fee (e.g. on every £1,000 overpaid on top of all this I'd pay a £50 "fee").

My only question before I call the lender tomorrow is why the overpayment for this year is set to a max of £24,600 and not to £25,000 or even £25,200 which is a real reflection of that 10%?
It's not a huge deal having to pay £400 - £600 less but I'm just curious to know how do they calculate this or get to that figure?

jenni_fer

What do the T&Cs say about it? I imagine every lender is different.

jumperabv3

T&C simply says 10%, doesn't go much into detail besides it.

jenni_fer

Had you already made an overpayment when you spoke to them?
Worth checking also when the 'year' is, ours is calendar year not one year from when the mortgage started.

jumperabv3

jenni_fer said:

Had you already made an overpayment when you spoke to them?
Worth checking also when the 'year' is, ours is calendar year not one year from when the mortgage started.

Yes, I did, I will have to double check it with them then.
For me it's a year, 365 days from the day the mortgage started.

[Deleted User]

Usually it would be 10% of the current balance at the start of the year (so every year your 'free' overpayment amount actually decreases) so in your case it should be 25,000. Was your mortgage for exactly 250k?

[Deleted User]

Mine is with Nationwide and I can overpay 10% of the original balance not the decending balance - not that I ever get near that with overpayments anyway ! 

tigsly

HSBC you can pay 10% on the 'decreased balance on the anniversary of your mortgage start date' , TSB - 10% as calculated on Jan 1st, so I guess it depends on your lender - who is your lender?

jumperabv3

nerox said:

Usually it would be 10% of the current balance at the start of the year (so every year your 'free' overpayment amount actually decreases) so in your case it should be 25,000. Was your mortgage for exactly 250k?

Yes, exactly that figure.

jumperabv3

tigsly said:

HSBC you can pay 10% on the 'decreased balance on the anniversary of your mortgage start date' , TSB - 10% as calculated on Jan 1st, so I guess it depends on your lender - who is your lender?

Birmingham Midshires.