Mortgage overpayments and capital reductions

An overpayment is when you pay more than the required amount on your monthly mortgage repayment. All of our mortgages allow overpayments meaning that you could pay your mortgage off quicker, and save on your overall interest.

How much can I overpay?

Our recent fixed rate mortgages allow overpayments of up 10% of your outstanding balance each year without ERCs being payable, although some older mortgages allow up to £1,000 per month. You can check the terms and conditions of your mortgage to see how much you can overpay, or you can call us on 08000 288 288 (call charges) and one of our team can check for you.

How do I overpay?

When it comes to making overpayments, you have two options. You can choose to overpay monthly, or in a lump sum.

To make an overpayment in a lump sum, you can:

  • make a bank transfer
  • send us a cheque
  • call us to make a card payment.

If you intend to overpay in monthly instalments, you can ask us to temporarily amend your Direct Debit by calling us. You can amend this amount at any time.

Please note: We need 14 days' notice to change your Direct Debit payment.

Bank transfer

Please send any lump sum to:

Sort code: 089302
Account number: 97880013
Reference: Please quote your unique account number.

Paying by cheque

Please make the cheque payable to 'The Co-operative Bank (insert your mortgage account number)' or 'The Co-operative Bank for (insert your name)'. Please also include your full name and address on the back of the cheque and send to:

The Co-operative Bank
PO BOX 4934
Unit 2 Interface Business Park

Paying by phone

Call us on 08000 288 288 (call charges) to make a card payment.

Can I get an overpayment back?

No, all Co-operative Bank mortgage overpayments are permanent.

What’s the difference between an overpayment and a capital reduction?

A capital reduction is when we apply the money you have paid to the mortgage balance, in one lump sum. This will re-calculate your outstanding mortgage balance and reduce the payments on your mortgage to ensure that it is repaid at the same time.

An overpayment won’t affect your monthly payment, but will reduce the amount of interest you pay on your mortgage, meaning it will be paid back quicker (or cost you less in the case of an interest only mortgage).

When is a capital reduction made?

We will apply your overpayments to your mortgage balance under the following circumstances:

  • If you breach your annual overpayment limit and are required to pay an ERC.
  • At the next anniversary of your completion date following overpayments being made, assuming you are still under your annual limit.
  • If you request a variation to your mortgage, eg. product switch or request additional funds.
  • If your product is linked to base rate and base rate changes, forcing a change to your monthly repayment
  • If you make an ad hoc request to us to capitalise your overpayments.

When your overpayments are capitalised, you will receive confirmation in the post of your new monthly repayments.

I don’t want to reduce my payments, can I keep them the same?

The default choice is to reduce your payments, but you can discuss your situation with one of our mortgage agents on 08000 288 288 (call charges). Changing the term of your mortgage is a formal change to your mortgage contract. We will only do this after you have discussed your situation with one of our mortgage agents, so that it is both affordable and suitable for you.

What is a "10% allowance" to overpay?

If your mortgage illustration states you have an annual 10% allowance to overpay, then this is worked out based on 10% of your mortgage balance as at the anniversary of your original completion date. You can make your 10% overpayment in a lump sum or via multiple payments at any time with the 12 months before your next anniversary date.

If you switch your rate part way through the year, then you will have a new 10% annual limit based on the new completion date when you switch your deal.

For example if you start a £100,000 mortgage on the 1 July 2015, you can pay an additional £10,000 (on top of your regular repayments) between 1 July 2015 and 30 June 2016 without incurring an Early Repayment Charge.

When can I overpay?

Overpayments can be made at any time. Although there is no date when you must overpay, the sooner you overpay the greater the effect on the total amount of interest you pay.

Also, please remember that if you intend to make your overpayment at the end of the year, that there are a number of Bank Holidays and postal delays which may affect clearing times for payments (especially by cheque).

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

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