Glossary - Overpayments

Overpayments means paying more than the required amount.
An overpayment occurs if a customer can pay back more than the usual payment charge, overpayments are possible on products such as credit cards, you can pay more than the monthly repayment with a flexible mortgage. This would mean that customers can pay their mortgages off earlier and save on interest charges, or they may be able to pay off their credit cards a lot quicker which would reduce the interest incurred

Example: Flexible UK Mortgage
A flexible mortgage rate allows the flexibility of repayments. Usually a borrower is allowed to overpay, underpay and take payment holidays. To help with the mortgage premium repayments consumers can offset their savings against their mortgage. Benefits will be shown straight away if an overpayment is made on certain flexible mortgages.

Useful Tip
Interest rates on a flexible mortgage are normally the same as a standard variable rate, the interest rates would rise and fall according to the Bank of England’s base rate. On some flexible mortgages they require that an overpayment is made before any underpayment or holiday payment is accepted.

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