How to pay off your mortgage early
Who is this page for?
This page is for first time buyers looking ahead, or homeowners who want to know how to pay their mortgage off early. Existing customers can find mortgage payment information on our manage your mortgage page.
How to pay off your mortgage early
Ways to pay off your mortgage early
If you’re in a good financial position and want to start paying off your mortgage early, there are a few ways this can be done:
- Increasing monthly payments – If your salary increases, you may want to pay more towards your mortgage. Check with your lender to see if you can increase the amount you pay each month. This is called an overpayment.
- Lump sum – An overpayment can also be a one-off lump sum. Check your overpayment terms, as there may be a limit on how much you can overpay in a year.
- Shorten your mortgage term – Generally, the shorter your mortgage term, the less interest you pay in total. This can mean higher monthly repayments, but you’ll pay less overall.
Overpaying a mortgage is one of the most common ways of paying back your mortgage early.
How to overpay your mortgage
First, you need to check with your lender that they allow overpayments. Some may charge a fee to pay more than your agreed monthly amount. These penalties could cost more than any savings made through overpaying your mortgage, so it’s important to check.
If you want to overpay and your provider allows it, you can overpay via:
- Standing order
- Bank transfer
- Direct debit
- Payment in a branch or by phoning your mortgage provider
If you’re interested in overpaying on your mortgage, try our mortgage overpayment calculator. Here you can get an estimate of how overpayments work.
How fast can you pay your mortgage off?
The speed you can pay off your mortgage will depend on a few factors:
- Your mortgage amount
- Mortgage term
- Interest rate
- Limits on overpayment
Usually, with a standard variable rate (SVR), you can overpay by as much as you want to pay off your mortgage faster.
Many mortgages change to SVR after your mortgage term ends. Check with your providers about which rate you are on and if there’s any limits on overpayment.
Early repayment charge
If you overpay more than the limit set by your lender or pay off your mortgage early, you may have to pay an early repayment charge (ERC). This amount will vary depending on the lender.
It’s usually equal to several months of the mortgage’s interest, a percentage of the original mortgage value or balance still owed. Check with your provider before you make any mortgage overpayments.
If you’re a Lloyds Bank customer, have a look at our terms around mortgage overpayments.
Calculators & tools
We have a range of mortgage calculators to help you:
- Find out how much you could borrow from Lloyds Bank
- See how much you could save if you make overpayments on your mortgage
- Get an idea how a change to the Bank of England Base Rate could effect your monthly payments
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
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