Overpayment question, please and thankyou.

kimplus8

I may be asking a really silly question that should be obvious to me.
If a mortgage has a cap on overpayments at 10% to avoid a penalty, is this 10% of the starting value of the mortgage or 10% of the decreasing value?
Also is the 10% inclusive of your normal monthly repayments or is it on top of your usual payments?
eg. Mortgage £100000, repayments £500 a month, could I pay an extra £10000 a year in overpayment or would it be limited to £4000 as im already paying £6000 in regular payments?

thankyou x

Dobbibill

Individual providers will have different rules.

Mine used to be 10% of the outstanding mortgage that year excluding normal monthly payments. EG in year 1 £10k of £100k plus £6k monthly payment meant balance on year 2 would be £84k so then that would be 10% of £84k. 

Check with your provider is the best option as you don't want to assume and get it wrong & it cost you charges  

Mortgage_Minimiser

Definitely check with your provider. I can overpay 10% of my original mortgage, so even though I have remortgaged I did it with the original lender so can still OP £24,375 a year which is 10% of what I took out in 2015.

MM
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