Make a mortgage payment

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 lots of 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.

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 will a one-off lump sum overpayment affect my on-going payments?

You can make a one-off overpayment whenever you want. Your mortgage balance will be reduced the day we receive the money, also reducing the amount of interest you pay. As this lowers your balance, you can choose to:

• Keep paying the same amount on your monthly payment. When we next re-calculate your monthly payment, we’ll set the new monthly payment to a level that will repay your mortgage over your current mortgage term.

Or

• Re-calculate your monthly payment immediately, to reduce your monthly payments but still repay your loan by the end of the current mortgage term.

Or

• If your mortgage is on a repayment basis, you can use the overpayment to reduce the remaining term. You’ll need to speak to our Mortgage Advisors first, to check affordability and advise if it’s right for you.

How will regular overpayments affect my on-going payments?

Where interest is calculated on a daily basis, your balance is reduced following every payment so the interest you're charged will go down. However, we won't recalculate the monthly payment each time, we'll wait until the next time there's another reason for recalculating your monthly payment, such as a rate change. If you're not sure whether your mortgage is on daily interest, please contact us.

How long does it take for a mortgage overpayment to be applied?

Once the overpayment is received, it’ll show on your mortgage account the next working day.

What if I change my mind?

If you’re thinking about making overpayments, you should know that overpayments typically can’t be refunded at a later date.

If you overpay by too much (normally 10% of your mortgage balance), you may have to pay an early repayment charge. The charge varies, depending on how long you have left on your mortgage deal, for example, if your mortgage charges interest daily or annually it’ll change how this will be calculated. Please check your mortgage policy document for more information.

You can check your overpayment allowance in the TSB app or online.

In the app

The easiest way to check your overpayment allowance is in the TSB app

1. Log in to the app
2. Tap on your mortgage
3. Find the option to ‘Manage’
4. Select ‘Overpayments’
5. Follow the instructions on screen

Not using the app yet? Download it here:

For help with registering call 03458 353 844 or +44 (0)203 2841 577 from abroad. Open 8am – 8pm Monday to Saturday, 8am – 6pm Sundays, excluding bank holidays.

Online

You can check your overpayment allowance using this form. You'll need your mortgage account number, which can be found on your mortgage statement or other mortgage related letters.

Mortgage Overpayment Form

Docusign digital forms: We use Docusign for this kind of request. Docusign will pass the information you provide to us in a secure manner and won't process it in any other way. Information on how we use your data can be found in our Data Privacy Notice.

You can make, amend, or cancel overpayments in the app, online, over the phone or by visiting us in branch.

In the app

The easiest way to make an overpayment is in the TSB Mobile Banking App:

1. Log in to the app
2. Tap on your mortgage
3. Find the option to ‘Manage’
4. Select ‘Overpayments’
5. Follow the instructions on screen

Not using the app yet? Download it here:

For help with registering call 03458 353 844 or +44 (0)203 2841 577 from abroad. Open 8am – 8pm Monday to Saturday, 8am – 6pm Sundays, excluding bank holidays.

Online

You can set up, change, or cancel a regular overpayment using this form. You'll need your mortgage account number, which can be found on your mortgage statement or other mortgage related letters.

Mortgage Overpayment Form

Docusign digital forms: We use Docusign for this kind of request. Docusign will pass the information you provide to us in a secure manner and won't process it in any other way. Information on how we use your data can be found in our Data Privacy Notice.

Other ways to make an overpayment

You can also make a mortgage overpayment:

• Over the phone by calling 0345 835 3380. Or +44 (0) 1452 890 225 if you’re abroad. We’re here from 8.30am – 7.00pm Monday to Friday (except bank holidays).
• Send a cheque, payable to TSB Bank PLC, to: Mortgages, TSB Bank PLC, PO Box GL14 9LR.

You’ll need your mortgage account number to quote as the reference for the payment. You can find this in any of your mortgage correspondence from us. If you quote your 14-digit mortgage reference we will spread the payment across all your mortgage sub-account(s).

How to make an overpayment on a sub-account

If you have a mortgage sub-account with us and want to make a payment into that specific account, you’ll just need your 14-digit mortgage reference, followed by the sub account number without any symbols or spaces. For example, for sub-account 01, you’d enter 01 at the end of your mortgage reference - this would be 04 if you wanted to pay into sub-account 04.

In branch

You’ll need to bring some ID – ideally your TSB debit card and PIN. If you don’t have one, bring your passport or driving licence. Search for a branch.

You an also book an appointment to visit us in branch.

If you've been making regular overpayments and are ahead with your mortgage, you could temporarily make reduced payments, or even miss a payment, up to the amount of your overpayments.

However, when we recalculate your monthly payment we use any overpayment you’ve made. This means you’ll need to start building up new overpayments before you can underpay again.

Request a payment holiday

You can ask for a payment holiday using our online form Mortgage Payment Holiday.

For more information, please see the Mortgage Payment Holiday section. We’ll give you an answer within 7 working days.

Docusign digital forms: We use Docusign for this kind of request. Docusign will pass the information you provide to us in a secure manner and won’t process it in any other way. Information on how we use your data can be found in our Data Privacy Notice.

What is a payment holiday?

A mortgage payment holiday is a temporary break from your monthly repayments.

Typically, payment holidays are to provide financial help if you’ve had a temporary change to your circumstances. Your mortgage repayments will pause, however your interest will continue to build up. This means you may end up paying back more interest overall. At the end of your payment holiday, we recalculate your monthly repayments and let you know the new amount.

You can apply for a payment holiday of 1, 2 or 3 months, or up to 6 months for maternity, paternity or adoption.

Who can apply for a mortgage payment holiday?

To be eligible for a mortgage holiday, you’ll need to:

• Have had your mortgage with us for at least 12 months
• Not taken out any additional borrowing for at least 6 months
• Be up to date with your mortgage payments for the last 12 months
• Receive an income from a job or self-employment
• Ensure everyone named on the mortgage agrees

We try to help as many people as possible, but there are some cases where a payment holiday isn’t available, for example: if the property is jointly owned under a Shared Ownership scheme or Buy-to-Let basis, or if your mortgage is in arrears or on an arrangement or debt management plan.

If you’re experiencing financial difficulty, a mortgage payment holiday may not be right for you. We’re here to help. Please give us a call on 0345 835 3374 and we can help find a solution that works for you.

How do I apply for a payment holiday?

If you meet the criteria above, then you can apply for a payment holiday using our online form. Everyone that is named on the mortgage must agree to the payment holiday. Please note, you can only apply for a payment holiday once every 2 years.

If your reason for a payment holiday is due to maternity, paternity or adoption, you’ll also need:

• MATB1 maternity certificate (signed/stamped)
• A copy of their birth or adoption certificate

Apply for a payment holiday

Docusign digital forms: We use Docusign for this kind of request. Docusign will pass the information you provide to us in a secure manner and won't process it in any other way. Information on how we use your data can be found in our Data Privacy Notice.

If you take a payment holiday, the interest will build up. This means you'll need to pay back more interest overall and your monthly payments will be higher afterwards.

If you have an interest-only mortgage or any interest-only part of your mortgage, a payment holiday will only cover the interest and not your full mortgage balance. If you have savings or investments that you plan to use to pay off your mortgage at the end of the term, it’s a good idea to regularly check that those are on track.

Here’s an illustrative example:

The amount your monthly payment will increase by, after the payment holiday depends on.

• Your balance
• Interest rate
• Remaining term
• Whether your mortgage is repayment, interest-only, or a combination of both
• And how long your payment holiday is for

The table below shows an example of how the payments could impact your mortgage. This shows a repayment mortgage over 2 different terms and an interest - only mortgage.

This example was worked out using a daily interest calculation and is based on a 3-month payment holiday.

What happens at the end of your payment holiday

We’ll write to you before the end of your payment holiday to let you know how much your new mortgage payments will be.

Can I extend a payment holiday?

We look at each request on a case by case basis. To ask if we can extend your payment holiday, please call us on 0345 835 3380.