Overview
An overpayment reduces your mortgage balance beyond the normal repayment schedule. It can reduce future interest, but the amount you can pay without an early repayment charge depends on your mortgage terms.
The familiar “ten per cent a year” rule is not universal. Even where ten per cent applies, the balance used to calculate it and the date the allowance resets can change the answer.
Quick Answer (Read This First)
Ask your lender for the remaining charge-free allowance on the specific mortgage part you want to overpay, and the date that allowance resets. Confirm whether regular extras and lump sums both count, and obtain a charge quotation if the proposed payment exceeds the remainder.
MoneyHelper recommends checking early repayment charges before overpaying and keeping money available for other needs. MoneyHelper: paying off a mortgage early.
Identify the Mortgage Product and Each Sub-Account
Your mortgage may contain more than one part, particularly if you borrowed extra later. Each can have a separate rate, product end date and overpayment allowance.
Before paying, ask which part will receive the money. A total mortgage balance of £200,000 does not establish that you can put the entire allowance against whichever sub-account you choose.
Check your mortgage offer and the current online account information. If they appear inconsistent, ask the lender to explain the figure before making a large transfer.
Do Not Assume All Lenders Use the Same Percentage
These examples show published policies checked on 9 September 2026, not recommendations or substitutes for your own offer.
| Lender example | Published allowance distinction |
|---|---|
| Nationwide | Many products reserved from 29 May 2013 allow 10% a year of the original loan amount; specified trackers and reversion products have different rules |
| NatWest | Its current guidance describes up to 20% of the outstanding balance for each sub-account on fixed or tracker products; its SVR has no overpayment limit or early repayment charge |
Nationwide also lists a £500 monthly allowance for certain older products. That is a reminder to check the product's reservation date rather than relying only on the lender's current advertising. Nationwide: overpayments; NatWest: overpayment guidance.
Work Out What “Ten Per Cent” Means
Suppose a mortgage originally borrowed £180,000 and now has £145,000 outstanding. Ten per cent of the original borrowing is £18,000. Ten per cent of the current balance is £14,500.
That £3,500 difference comes entirely from the calculation base. Neither number should be used until you know which balance and reference date the contract specifies.
The annual period also needs a definition. It may be tied to a calendar year, product year or another contractual date. Ask for the actual reset date, and whether unused capacity carries forward. Do not assume an unused allowance accumulates automatically.
Deduct Payments Already Made
Regular overpayments can use the same allowance as occasional lump sums. Obtain the lender's running total rather than counting only the larger transfers you remember.
For illustration, assume an £18,000 annual allowance, eight monthly extras of £250 and a previous £6,000 lump sum. You have used £8,000, leaving £10,000.
An additional £12,000 would exceed that illustrative remainder by £2,000. If the contract charged 2% solely on that excess, the charge would be £40. Your lender's actual rules determine the chargeable amount and percentage; full redemption may be treated differently.
Check pending payments too. A scheduled monthly extra arriving on the same day as a large lump sum can alter the calculation.
Ask What the Payment Changes Afterwards
Reducing the balance does not always produce the result you expect on the next bill. Depending on the lender and your instructions, it may reduce future monthly payments, shorten the effective repayment period or trigger a recalculation at a later point.
Tell the lender your objective and ask which options it offers. If you want to keep the monthly payment unchanged, establish whether an adjustment is needed rather than assuming the system will do it automatically.
Also ask whether the money can be accessed again. A standard mortgage overpayment is not the same as depositing into an easy-access savings account. Nationwide describes a separate overpayment reserve with benefits that depend on the mortgage deal. Nationwide: overpayment reserves.
Consider the Timing Before Paying a Charge
If the allowance resets soon or the early repayment charge is about to end, compare waiting with paying immediately. The useful calculation includes interest saved during the waiting period, any savings interest earned and the actual charge.
For the broader decision about where spare cash belongs, read overpaying versus saving. If your deal is ending, the remortgage planning guide explains how to coordinate the dates.
Frequently Asked Questions
Browse mortgage guides. This is general information; check your lender's current terms before making a payment.
