Making overpayments - Morag

Making overpayments  

 

Making a lump sum overpayment or regular monthly overpayments will reduce your mortgage balance and the amount of interest you pay. That may help to pay off your mortgage earlier or could mean that you’ll have more options to remortgage in future. 

You can make unlimited overpayments without paying an early repayment charge. 

If you’re thinking about paying off your balance in full, there’s more information on our Paying off your mortgage page.

 

Our overpayments calculator

Our calculator will help to show how overpayments might affect your mortgage. You can use it to show how even relatively small regular monthly overpayments could have a significant effect on the amount of interest you’ll pay over your remaining term.

Overpayment calculator

See the positive impact making overpayments could have on your mortgage.

Whether it’s a regular monthly overpayment or a one-off amount, you might be surprised how much difference it makes.

Using this tool

You’ll need to have an idea of the amount you can afford to overpay. You’ll also need to know your outstanding balance, repayment basis (interest only, part & part or capital & interest), current interest rate and remaining term of your mortgage.

Find out how to quickly see up to date information about your mortgage account

If your mortgage is made up of multiple sub-accounts, you won’t be able to use the calculator and you’ll need to call us to discuss your situation.

Benefits of making overpayments

Overpayments are easy to set up and you won’t be charged any fees by us for making them.

You can make additional payments to reduce your mortgage balance every month or as a one-off lump sum at a particular point.

Each overpayment you make helps reduce your mortgage balance meaning you’ll pay less interest over the remaining term of your mortgage.

Reducing your balance could also reduce your loan to value ratio (the amount you owe compared to how much your property is worth) which could make it easier for you to remortgage in the future.

Understanding the results

Our calculator shows how making overpayments on a mortgage reduces the total amount of interest paid and balance owed at the end of the mortgage term.

The results you’ll see are based on the information you have entered for your overpayment amount, current balance, interest rate, type of mortgage and remaining term.

Our calculator uses a simple method to determine the amount of interest you’ll pay on your mortgage, by dividing the total amount of interest you’ll pay over a full year into 12 equal monthly amounts.

Since interest on your mortgage may be calculated differently (such as on a daily basis), then the actual impact of making overpayments on your mortgage may differ slightly to the figures shown in the calculator.

Our calculator also makes several other assumptions, including:

  • You make your standard monthly payment every month over the full remaining term of the mortgage.
  • You make the same regular monthly overpayment amount (if any) every month over the full remaining term of the mortgage.
  • There is no change to your interest rate over the full remaining term of the mortgage.
  • There are no fees or charges added to your mortgage.
  • There are no other changes to your mortgage which would result in a recalculation of your monthly payment (e.g. changes to your remaining term or a switch to repayment/interest only basis).

Since some of these assumptions may not apply to your mortgage, the results of this calculator should only be used as a guide.

Use calculator

 

Make a lump sum overpayment using Self-Serve 

You can make a lump sum overpayment of up to £10,000 by debit card using our secure online Self-Serve system. You can find out more about using Self-Serve here.

Please think carefully before you make a lump sum overpayment. You will not be able to ask for the overpayment back or request any additional borrowing from us in future.

We’ve provided some more information about what happens when you use Self-Serve to make overpayments below.

If you’re ready to make an overpayment by debit card, just sign in with your card to hand and click on ‘Make a Lump Sum Overpayment.’

After you’ve made your overpayment we’ll usually recalculate your monthly payment – it may take up to five working days for your new payment to be displayed in Self-Serve. We’ll also write to tell you your new monthly payment amount. 

We’ll provide on-screen prompts explaining how the payment will be applied before we ask you to confirm the payment.

If you want the overpayment to go to a different sub-account, you’ll need to contact us.

If your account is in arrears, you’ll be prompted to make a separate payment to clear the arrears before you can go ahead and make a lump sum overpayment by debit card.

We’ll only accept debit card overpayments if the name of the cardholder matches with the name of the person signed in to the account. 

If you want to pay more than £10,000, you’ll need to use one of the other ways to make an overpayment explained below. 

If you want to find out how your monthly payment will change before you decide to make an overpayment, but you’re not sure about using our overpayment calculator, please call us. We’ll give you an estimate over the phone and we’ll also follow that up by sending you the details in a letter. 

You should also contact us if you want to give us more detailed instructions about how we should apply your overpayment to your account. For example, if you want the payment to be applied to a specific sub-account. 

You can also ask us about combining your overpayment with making a change to the repayment type of your mortgage. The calculators available on our Useful tools page will give you an idea of how your mortgage could change. Please contact us to discuss your options here.

Make a lump sum overpayment by bank transfer, cheque or phone

You can make a lump sum overpayment by bank transfer, cheque or using a debit card over the phone. There are more details below.

Please think carefully before you make a lump sum overpayment. You will not be able to ask for the overpayment back or request any additional borrowing from us in future.

You can make a lump sum overpayment as a single payment by bank transfer. You can usually request the transfer online, in branch or over the phone.

Our bank details that you’ll need to use vary for different customers. To find the correct bank details for you, please call us.

Please also make sure to verify the details before sending your payment and include your account number as a reference. If we receive your payments without a reference, they may not reach your account.

You can make a lump sum overpayment by sending us a cheque, made payable to Morag Finance Ltd.

Please write your account number on the back of the cheque and post this to us at:

Morag Finance
Gargrave Road
Skipton
BD23 2HL

Please allow eight working days for postage and the payment to be applied to your account.

You can call us and make a debit card payment.

If one of our agents takes your debit card payment you may be able to pay up to a maximum of £14,999.

The maximum amount that you’ll be able to pay using our automated system without speaking to an agent is £5,000. 

If you make a payment on top of your regular monthly payment without giving us any specific instructions here’s a few important notes about how we’ll process it and apply it to your account:

  • If you have any arrears on your account, we’ll use your payment to clear them.
  • If you make an overpayment of more than £1,000, we’ll recalculate your monthly payment and write to you confirming the details.
  • Payments under £1,000 may not immediately trigger recalculation of your monthly payment. However, the reduction in your outstanding balance will affect the next routine recalculation of your monthly payment, for example when you receive your annual statement or if there is a change in the rate of interest you pay.

We can only accept overpayments made by someone named on your mortgage account, unless you’ve set up a third party authority, allowing someone else to make payments to your account on your behalf.

We may also need to ask you to provide details about the source of any overpayments. That’s nothing to worry about, it’s simply a routine requirement of money laundering regulations. If we need any more information we’ll write and let you know.

 

If you need to discuss your overpayment

If you want to find out how your monthly payment will change before you decide to make an overpayment, but you’re not sure about using our overpayment calculator, please call us. We’ll give you an estimate over the phone and we’ll also follow that up by sending you the details in a letter. 

You should also contact us if you want to give us more detailed instructions about how we should apply your overpayment to your account. For example, if you want the payment to be applied to a specific sub-account. 

You can also ask us about combining your overpayment with making a change to the repayment type of your mortgage. The calculators available on our Useful tools page will give you an idea of how your mortgage could change. Please contact us to discuss your options here.

Making regular overpayments

You’ll need to contact us to set up regular monthly overpayments. 

Each overpayment will reduce the amount you owe but won’t reduce the term of your mortgage. If you want to make overpayments with the aim of paying off your account sooner, you’ll need to regularly review the amount you’re paying. 

Please think carefully before you make any regular overpayments. You will not be able to ask for any overpayments back or request any additional borrowing from us in future.

There is more information about making regular overpayments below.

You can arrange to pay a fixed amount on top of your normal monthly payment. For example, if you pay by Direct Debit your normal monthly payment is £500, and you arrange to pay an additional £200 we’ll collect £700 each month. 

If your normal monthly payment changes, for example, because of a change in the interest rate you pay, we’ll collect the amount of the new normal payment plus £200. If the interest rate you pay increased, and your normal monthly payment increased to £525, we’d collect £725 per month.  

This means that whenever we tell you that your normal monthly payment is changing, you’ll need to check that the extra amount you’re paying is still suitable for you. 

You can arrange to pay a fixed amount each month. 

The fixed amount can’t be less than the amount of your normal monthly payment. If your normal monthly payment changes, for example, because of a change in the interest rate you pay, we’ll continue to collect the fixed payment amount provided the fixed amount is more than your normal monthly payment. 

For example, you pay by Direct Debit and your normal monthly payment is £500, but you arrange to pay £600 per month. If your normal monthly payment changed to £525 because of a change in the interest rate you pay, we’d continue to collect £600 per month. If your normal monthly payment increased to £625, the overpayment would be cancelled, and we’d collect £625. 

Any overpayments you make will reduce the amount you owe but your normal monthly payment may change, for example when there’s an interest rate change, or when we recalculate your monthly payment at the time you receive your annual mortgage statement.

When your normal monthly payment does change it’s important to check the amount you’re overpaying isn’t more than you can afford, or if you want to increase the amount you overpay.

Making regular overpayments won’t reduce the term of your mortgage. If you don’t want to formally reduce your mortgage term, but you’re making overpayments because you want to pay your mortgage off sooner it’s a good idea to check and, if necessary, adjust the amount you overpay at least once a year when we send you your annual mortgage statement.

If you don’t pay by Direct Debit, you can make regular overpayments simply by paying more than your normal monthly payment by debit card, standing order, bank transfer or cheque.

An overpayment of more than £1,000 may trigger recalculation of your monthly payment. Otherwise, any reduction in your outstanding balance will affect the next routine recalculation of your monthly payment, for example when you receive your annual statement or if there is a change in the rate of interest you pay.

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