Are There Mortgages with Unlimited Overpayments?

While it's uncommon to find mortgages with truly unlimited overpayment options, many mortgages do offer the flexibility for borrowers to make overpayments without incurring early repayment charges (ERCs) or penalties. Overpayments can help borrowers reduce their mortgage balance faster, potentially saving on interest payments and shortening the loan term. 

However, lenders typically impose certain limits on overpayments, such as a percentage of the outstanding mortgage balance or a specified amount within a given time period (e.g., each calendar year). These limits vary among lenders and mortgage products. 

Mortgages with Unlimited Overpayments 

Nearly every lender has a product which allows unlimited overpayments, even if it is only their standard variable rate (SVR) and the rate is not particularly competitive. 

My question to you would be "do you really need a mortgage with unlimited overpayment facility?"  Most mortgage products nowadays allow up to 10% of the mortgage debt to be repaid without penalty each year and there are others that allow up to 20% without compromising on the rate.  

Unlimited Overpayment Mortgage Lenders 

If you really do want to make unlimited overpayments, then you should look for products with no early repayment charges or products that allow you to repay all but £1 without charge.  You will pay for the extra flexibility, but Coventry, Hinckley & Rugby, Newbury, Nottingham, Leeds, and Metro Bank all have variable rate mortgages that allow unlimited overpayments. 

It's essential for borrowers to carefully review the terms and conditions of a mortgage product to understand the overpayment options available. Some mortgages may allow for penalty-free overpayments up to a certain limit, while exceeding that limit may incur charges. 

Offset and Current Account Mortgages for Increased Flexibility 

Whilst these lenders allow overpayments and some of them will allow you take payment holidays or underpayments against any banked credits, not all of them will allow you to borrow the money back should your situation change.  The most flexible mortgages available are offset mortgages and current account mortgages.   

With an offset mortgage you can make overpayments into a linked savings or current account and instead of receiving interest on the investment the savings balance is used to offset the mortgage balance before calculating the interest charged on your mortgage.  You can then elect to either pay a reduced monthly payment or keep your monthly payments the same and reduce your capital balance quicker.  As the overpayments are held in a savings/current account they can be accessed at any point in the future should you need the funds.  

A current account mortgage operates as one account with the mortgage debt, current account balance and even credit card debts all held in one big pot.  It takes a bit of getting used to seeing a current account debt of say £125,000, but for the financially astute it can be one of the quickest ways to repay your mortgage.  Unfortunately, these current account mortgages are very thin on the ground at the moment. 

Remember that mortgage terms and conditions can change, and it's crucial to seek professional advice and thoroughly review the terms of any mortgage agreement before making a commitment. 

Speak with one of our independent mortgage advisers who can discuss your options on call 0330 433 2927 or submit an enquiry to discuss this with one of our consultants.