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Overpaying your mortgage

Find out how to overpay on your mortgage.

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  • Overpaying

What does overpaying your mortgage mean?

Overpaying your mortgage simply means paying more than the amount agreed in your terms. You can pay extra each month or as a lump sum.

If you can afford to overpay even by a small amount you could:

  • Reduce your mortgage balance quicker 

  • Potentially shorten your mortgage term

  • Reduce the total amount of interest you pay 

  • Potentially get you a lower interest rate in the future

4 ways to overpay

If you can afford to, you can overpay up to 10% of your mortgage balance each year without paying an early repayment charge.


1. Make an online bank transfer or set up a standing order

You can overpay your mortgage by setting up a standing order or making an online bank transfer from your bank.

Please quote the following details:

  • Account number: 90653535
  • Sort code: 20-18-23
  • Reference: Your mortgage account number 

2. Make a payment over the phone

You can call us to make an overpayment over the phone.

Contact us: 0330 333 4000


3. Visit a branch

You can pay by cash or cheque at your local branch.

Find your local branch


4. Post a cheque

Send a cheque in the post to:

Principality Building Society, Principality Building, PO Box 89, Queen Street, Cardiff, CF10 1UA

What you need to know about overpayments


Overpayment restrictions 

You can overpay up to 10% of your mortgage balance on your Principality mortgage each calendar year, without having to pay an early repayment charge. 


Early repayment charges 

You can overpay up to 10% of your outstanding mortgage balance each calendar year. If you want to overpay by more than 10% of your mortgage balance, you may have to pay an early repayment charge (ERC).  


The amount your ERC will be is dependent on your mortgage product. If you want to check what the ERC is on your mortgage, please refer to your official mortgage offer.


Other things to consider

You may want to seek advice to decide if overpayments are the right option for you. You can get in touch with one of our mortgage experts who will be happy to help. 

 

Overpayments are flexible and you can stop overpaying at any time. However, you should consider whether you can afford an overpayment or if you need savings in the future for an unexpected cost.  


Your regular monthly payments will not change if you make an overpayment. If you would like to discuss reducing your monthly mortgage repayment you will need to get in touch.

How do overpayments work?

Let’s say your mortgage balance is £150,000. You have a 2 year fixed term mortgage with an interest rate of 4.9% and you plan to pay your mortgage off within 20 years. Your monthly mortgage repayments would be £982 for the 2 years you are fixed in.  


Now let's say you decide you want to overpay; you have 2 options:

You decide to pay a lump sum of £5,000.  


By paying this lump sum, you save in interest payments over the term of your mortgage, assuming your interest rate stays the same.* 


The impact of this is:  

  • Your mortgage debt becomes £145,000. 
  • You save £7,910 in interest repayments. 
  • Your total mortgage term reduces by 1 year and 1 month.

Now let’s imagine you look at paying an extra £100 per month for the remaining term of your mortgage and your interest does not change over that time.* 


The impact of this is: 

  • Your mortgage debt reduces more quickly (for example reducing in the first year to £144,240 instead of £145,470 without overpayments). 
  • You save yourself £13,870 in interest. 
  • Your mortgage term reduces by 2 years and 11 months.

*Please remember that interest rates change over time, so this is just an example

Your home may be repossessed if you do not keep up repayments on your mortgage.