Tesco mortgage 20%overpayment allowance

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moneysavinggirl40
moneysavinggirl40 Posts: 434 Forumite
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edited 9 June 2017 at 7:59PM in Mortgages & endowments
Has anyone got a Tesco mortgage? Is it 20% overpayment allowance of the amount your originally borrowed per year or per initial period? I have looked at terms on illustration which said something about ERC period, but in the same sentence said "year". My ERC is 2 years of 2%. I have a 2 year tracker. So come beginning of July 2017 am I allowed another 20% on the outstanding figure?
TESCO BANK MORTGAGE WEBSITE:
  • You could pay off your mortgage early. During the initial rate period, you can overpay by up to 20% of the outstanding balance each year with no early repayment charge.
  • We calculate the maximum yearly amount you can overpay on the same date each year.
  • When the initial rate period ends, you can overpay as much as you want without any charges.

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  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Be 20% of the outstanding balance on a given date. For arguments sake let's say you owed a £100k on the 31st May. You can overpay by £20k in the year to 31st May 2018.

    If you do overpay. Take into account your normal payments. As overpaying will reduce the interest charged. Resulting in your normal monthly payments paying down a higher element of capital than they would have done.
  • moneysavinggirl40
    moneysavinggirl40 Posts: 434 Forumite
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    Thrugelmir wrote: »
    Be 20% of the outstanding balance on a given date. For arguments sake let's say you owed a £100k on the 31st May. You can overpay by £20k in the year to 31st May 2018.

    If you do overpay. Take into account your normal payments. As overpaying will reduce the interest charged. Resulting in your normal monthly payments paying down a higher element of capital than they would have done.

    So I have a 2 year tracker. For arguements sake Year 1 period (31.5.17-31.5.18) 20% of outstanding balance £20K on £100K.

    Then beginning of Year 2 period 31.5.18-31.5.19 20% on 80K aswell as -regular DD of £500pm let's say outstanding balance is now 74K therefore at beginning of Year 2 am I allowed 20% of 74K.

    Ie. Am I allowed to overpay by a further £14800 without incurring ERC's?
  • moneysavinggirl40
    moneysavinggirl40 Posts: 434 Forumite
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    The questions I need to ask Tesco Bank is what date is my overpayment allowance worked out for the year and that will be the figure I am allowed to overpay by. But presumably its 20% of borrowed amount in year 1 and then year 2 it's a FURTHER 20% of outstanding amount. If I want to keep within ERC.

    Let me know if I'm wrong. Cheers
  • xyz123
    xyz123 Posts: 1,663 Forumite
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    :o
    moneysavinggirl40 wrote: »
    So I have a 2 year tracker. For arguements sake Year 1 period (31.5.17-31.5.18) 20% of outstanding balance £20K on £100K.

    Then beginning of Year 2 period 31.5.18-31.5.19 20% on 80K aswell as -regular DD of £500pm let's say outstanding balance is now 74K therefore at beginning of Year 2 am I allowed 20% of 74K.

    Ie. Am I allowed to overpay by a further £14800 without incurring ERC's?

    Yes correct. Allowance is annual limit
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