Managing my mortgage FAQ

Overpaying my mortgage

What is a mortgage overpayment?

Making an overpayment is when you’re paying your mortgage provider a larger amount than you’re supposed to pay. You can do this either by:

  • making a one-time lump sum payment
  • adjusting your monthly repayments so that they’re always greater than the specified amount

Depending on your lender, interest on your mortgage may be calculated daily, monthly, quarterly, or annually. If interest is calculated daily or monthly, the timing of your overpayments won’t matter. But if it’s only calculated periodically, you should coincide your overpayment with the calculation or you won’t make any savings.

Before making an overpayment, you should consider the following:

  • Not all lenders allow overpayments.
  • Overpayments mean less interest for lenders and therefore less money for them, so they may charge hefty fees to dissuade you.
  • Fees can be as high as 5% of the overpaid amount. You may find that this cost cancels out or exceeds the benefits of overpaying.
  • Many lenders allow overpayments of up to 10% of the outstanding amount each year during the term of a fixed rate mortgage. Once the term ends and you’re switched to the standard variable rate, many lenders won’t apply any restrictions, whilst others will charge for overpayments at every stage of the mortgage.
  • If you don’t have any savings and only limited extra cash, you may want to building them up before you think about overpaying.
  • Other unsecured debts such as personal loans and credit cards carry higher interest than your mortgage, so if you have any, it’s best to settle these before overpaying.
  • Unlike putting your extra cash into a savings account, any overpayments made towards your mortgage won’t be able to be accessed again until you sell your property.

What are the benefits of overpaying my mortgage?

Making overpayments has three main benefits:

  1. It can help you pay off your mortgage sooner. The extra amount you overpay goes entirely towards repaying the mortgage itself, not on any interest you owe. This means you could shorten the amount of time you need to repay the mortgage in full.

  2. It can lower the amount of interest you have to pay. Since overpayments pay down the mortgage itself, you could significantly cut down the amount of interest you have to pay. This is because the interest you’re charged is calculated on the outstanding amount you owe. If your outstanding amount is lower, the amount of interest calculated will be lower too.

  3. It can give you increased flexibility. Overpayments put you ahead of schedule by covering the cost of specified repayments for many months. This opens up the option of underpaying down the line. Not all lenders will allow you to do this.

Transferring my mortgage

How to change the name on my mortgage?

Should you wish to change the name on your mortgage, you’ll need to contact your lender and solicitor. If you’ve recently married or wish to revert to your maiden name after a divorce, you’ll need to obtain legal documents showing a name change; for example, a marriage certificate or a copy of your divorce decree.

Your lender may also want a photocopy of your updated driver's license and may charge a small processing fee.

If you’re recently married, your lender may allow you to add your spouse without having to refinance the loan. However, should you want to add or remove names on the mortgage for other reasons, you must refinance.

How to transfer my mortgage to another property? (Portable mortgages)

Whether you’re relocating or moving to a larger property and you’re tied into your current mortgage deal, you can take it with you by ‘porting’ it. The typical cost to transfer your mortgage is a few hundred pounds.

If you’re still tied into a deal or wish to remain on the existing one, you can request to transfer it to your new home, meaning you’ll continue to be charged the same interest rate and the same terms and conditions will continue to apply, including the product end date. If you have a mortgage with early repayment charges, porting can often be the only way to avoid any early exit fees.

Before you apply, your lender will need to value the new property to satisfy themselves that they’re happy to lend on it. If the new property is larger, you may need to borrow more (known as a 'top-up') and you’ll have to satisfy your lender that you can afford the higher repayments. Their criteria will be based on your income and outgoings, and any other payments. Should they not agree to extra borrowing but another lender will, you’ll need to pay the early repayment fee in order to finance your new home.

If you’re not tied into a mortgage deal, you’re better off switching providers for a more competitive rate. An online mortgage broker like Trussle can quickly compare different offers and find the right one for you.