Can you overpay on a fixed rate mortgage

Home Mortgages Regulatory Information. More than branches across Ireland makes us the perfect. Registered Office: 10 Molesworth Street, Dublin 2. Can I make an Overpayment on my Mortgage? Yes, you can make an Overpayment on your mortgage, depending on what option you chose on the Overpayment form you can: Reduce your monthly scheduled repayment amount, by paying a lump sum payment, complete the relevant information on the Overpayment form and select option a this option is also available via on Internet Banking Reduce your mortgage term by paying a lump sum payment, completing the relevant information on the Overpayment form and selecting option b Increase your monthly mortgage repayment and reduce your term by completing the relevant information on the Overpayment form and selecting option c You can only use an AIB funding account to make an Overpayment or Increase your scheduled monthly repayments when using this form For fixed rate customers please be aware that a breakage cost may occur if you pay a lump sum or wish to reduce your mortgage term.

The fee could eat into your savings and so it may be better not to repay, or overpay, some of your mortgage early — or to change to a different interest rate.

Top tips: Paying off fixed mortgage early could trigger hefty fee. Close Stock image. Facebook Twitter Email Whatsapp. Facebook Twitter Email. Check if you will be charged for repaying your mortgage early An early redemption fee, where charged, could easily run into the thousands. With Bank of Ireland, KBC Bank and Ulster Bank, you can avoid the early redemption fee if you make an overpayment off a fixed mortgage - as long as you stick to certain limits.

With Ulster Bank, you can make overpayments of up to 10pc of your "outstanding fixed rate balance each year" without incurring a break fee. KBC also allows you to make overpayments of up to 10pc of your mortgage balance without incurring a fee. Should you make a lump sum overpayment off a Bank of Ireland fixed mortgage however, you may be hit with an early redemption fee. With Permanent TSB, you can avoid break fees when overpaying a fixed rate mortgage - however, the overpayment is only applied as a credit on the account and doesn't come off the capital.

A spokesman for the bank said the customer would still get "the interest rate benefit [as a result of the overpayment] in the background". Enter email address This field is required Sign Up.

You cannot avoid break fees with AIB or EBS by keeping your overpayment within a certain limit - so it is very likely you will be hit with such a fee if you overpay a fixed mortgage with either of these lenders. It won't make financial sense to overpay a fixed mortgage if much of the savings are gobbled up by a break fee. Be sure to get the full benefit of lower interest if overpaying your mortgage. You may need to instruct your bank to make some changes to your mortgage so that this happens and even if you don't need to do so, get your bank to clarify that the overpayment has been taken off your mortgage and that you are getting the benefit of lower interest right away.

Whether and by how much you should overpay on your mortgage will also depend on the type of deal you have in place. If you have a flexible mortgage, such as an offset mortgage , you can freely overpay and then access your funds later if you need them for some reason.

But if you are on a fixed rate or variable rate deal lasting say two or five years, there may well be limits on how much you can overpay before facing charges. Offset mortgages were pioneered by The Woolwich now part of Barclays and allow borrowers to offset their savings rate in order to pay less off their mortgage.

Some mortgages allow for unlimited overpayments — but others, particularly fixed-rate mortgages, will charge you a fee if you overpay more than a certain amount. The fees - known as early redemption charges or penalties - and overpayment thresholds can vary widely between lenders and products, so be sure to read the small print of your mortgage.

Or just phone up your lender and ask. Your lender may then give you the option of setting up a new direct debit with the overpayment included. Or instruct you to transfer a lump sum from your bank account to the mortgage account. You may even be able to add your mortgage account as a payee within your mobile banking app and then send overpayments whenever you feel like it.

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