Interest only overpayment advice

Confused_2025

Have an interest only sub  account of £100 000 which I would like to overpay. However I'm under the impression that no matter what I overpay, I'll always have that balance. Can someone advise in layman's terms? Any help will be appreciated thanks.

Typhoon2000

If you overpay your balance will go down.

Edi81

You want to make a capital repayment. Therefore the balance will be £95k if you pay £5k.  Interest will go down. 

Confused_2025

Thank you both for taking the time to reply. @Edi81that is actually exactly what I wanted to do as I have worked overtime for most of the previous year and saved that exact amount. However, I wasn't sure how this would affect this interest only sub account of my mortgage. 

ACG

You pay £5k off the balance. 
They will then reduce the monthly repayment on the remaining £95k as the balance will then be a little lower. Or you might be able to keep the repayment the same and gradually reduce the balance each month - although whether this is possible will depend on the lender. 

Confused_2025

Soo, not to sound stupid, I thought you are only paying the interest even if you overpaid - not the capital - that's why it's called interest only. So the £100000 eventually has to be paid as a lump sum. 

Hoenir

Anything you pay into the mortgage over and above the monthly interest charged. Will reduce the capital balance owed. 

amnblog

The Lender is saying that according to the contract you only need service the interest on the £100,000 whilst the mortgage is in force.

If you chose to repay £5,000 your Contract means you will only be servicing the interest on £95,000.