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Can I Overpay My Mortgage?

A mortgage overpayment is any additional payment you make over your usual monthly mortgage amount. This can be either in the form of a one-off lump sum or as regular monthly overpayments made across the year.

There are numerous benefits to overpaying your mortgage. These include reducing the overall term of your mortgage, interest savings and lowering your monthly repayment costs. But while there are many benefits to mortgage overpayments, there are also factors you need to be aware of, such as early repayment charges (ERCs), overpayment allowances and other considerations.

Here, we’ve put together a go-to guide on what you need to know.
 

What Are the Benefits of Overpaying a Mortgage?

If you’re able and your mortgage provider allows, there can be a whole host of benefits of overpaying your mortgage.

Interest Savings

When you overpay on your mortgage, you’ll reduce the amount you owe on your home. And by paying off your mortgage quicker, you’ll pay less interest overall and reduce the amount you need to pay back across the lifetime of your mortgage.

Reduced Mortgage Term

By overpaying on what you owe, you can significantly reduce your balance and potentially shorten your mortgage duration (depending on the terms of your loan - always check your terms) and become mortgage-free much sooner.

Improved Loan-to-Value (LTV) Ratio

The more capital you pay off through overpayments, the lower your loan-to-value (LTV) will be. If you then choose to remortgage further down the line, it’s likely you’ll get access to more competitive mortgage rates as you’ll have increased the equity you have in the property.

Discover our range of mortgages at TSB.
 

Things to Think About Before Making Overpayments

Before you commit to making any mortgage overpayments, there are a few factors you should consider first.

Early Repayment Charges (ERCs)

Depending on your mortgage provider, you may have to pay early repayment charges (ERCs) if you exceed your loan’s annual overpayment allowance. It’s important that you check the terms and conditions of your mortgage carefully in advance to avoid facing any potential penalties.

Overpayment Allowances

Your lender may offer annual allowances on your mortgage where you can make overpayment without facing any ERCs. At TSB, for example, our policy allows you to make a 10% overpayment of the mortgage balance as of January 1st each year without incurring any charges.
 

How to Make Overpayments with TSB

If you have a mortgage with TSB, there are two main ways you can make overpayments on your loan.

Regular Overpayments

A regular overpayment allows you to specify an extra amount you want to pay regularly each month. At TSB, making this type of overpayment couldn’t be easier with the TSB Mobile Banking App. If you want to set up, amend or cancel your regular mortgage overpayments, all you need to do is:

  1. Log in to the app
  2. Select your mortgage account
  3. Click “Manage” > “Overpayments”

Alternatively, you can complete the Mortgage Overpayment form online, or contact TSB directly to discuss your overpayment circumstances. Just have your mortgage account number at the ready.

Lump Sum Overpayments

Rather than make a regular overpayment, you can also make a one-off lump sum overpayment.

To make one of these, you’ll need your mortgage account number to quote as a reference. If you quote your 14-digit mortgage reference we will spread the payment across all your mortgage sub-account(s).

If you wish to make the payment to a specific sub-account, you’ll need to use your 14-digit mortgage reference followed by the sub-account number. For example, to make a payment to “sub-account 1” you should quote your 14-digit mortgage account number followed by 01 at the end without any symbols or spaces.

Here’s how you can make a lump-sum overpayment to your mortgage:

  • By faster payment or standing order using our bank details using the relevant reference as explained above. Sort code: 30-28-86, Account number: 00000000
  • Send a cheque, payable to TSB Bank Plc, to: Mortgages, TSB Bank Plc, PO Box 453, Mitcheldean, GL14 9LR
  • Alternatively, you can make a debit card payment by calling us on 0345 835 3380. We’re here from 8.30am – 7.00pm Monday to Friday (except bank holidays)

Read more information on how to make an overpayment on your mortgage with TSB.
 

How to Manage Your Overpayments

Tracking Overpayment Allowances

To ensure you don’t incur any ERCs, it’s a great idea to proactively track your overpayment allowances using your TSB Mobile Banking App. Follow these simple steps to manage your overpayments:

  1. Log in to the app
  2. Select your mortgage account
  3. Navigate to “Chat to us” and type “Overpayment Allowance”
     

Understanding the Impact on Monthly Payments

Overpaying on your mortgage means you can lower the amount of interest you pay, reduce your LTV and potentially become mortgage free sooner. Not only this, but because your outstanding capital balance will be lower, your interest would be charged on a smaller amount and could make your repayments lower too.

We recommend making sure your mortgage provider is crystal clear as to whether you want to reduce the mortgage term or the monthly payment amount when making overpayments. If you don’t specify your wish to reduce your term, for example, the lender could assume you want to pay off some of the following month’s repayment early instead.
 

Ways We Can Help

If you’re not sure where to start with anything to do with your mortgage journey, we’re here to help. Mortgages can be very complex and there’s no shame in asking for some guidance to consider your options and find the perfect deal to suit your circumstances.

Mortgage Calculator

Use our super handy mortgage calculator to help give you an idea of how much you can borrow and what your monthly payments will look like.

TSB Support Channels

We want you to feel in control throughout every step of the mortgage process. You can contact us through a whole host of support channels, including:

  • By phone: give us a call between 8am and 8pm – you can find the relevant number for your concern on our Contact Us page
  • In-branch: find your local branch and discuss your circumstances in-person
  • Online chat services: simply log in to your TSB Mobile Banking App and “Chat to us”

Other Information

Our expert team has compiled lots of handy TSB guides and articles related to mortgage management and financial planning. These include topics such as “How much does it cost to move house?” and “How to Improve your home”.

TSB Bank plc. Registered office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Registered in Scotland, no. SC95237.
Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 191240.

TSB Bank plc is covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service.

Calls may be monitored and recorded in case we need to check we have carried out your instructions correctly and to help us improve our quality of service. Not all telephone banking services are available 24/7.

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