NatWest to increase overpayment allowance to 20% – brokers react

by | Mar 13, 2023

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New and existing NatWest mortgage customers are now able to make an overpayment of up to 20%, up from 10%, without incurring an Early Repayment Charge (ERC), the lender announced this morning.

Overpayment allowances will renew annually on the anniversary of product draw down. This increase will apply to customers on fixed or tracker rate products. Free PR platform, Newspage, asked brokers for their thoughts and have shared them with IFA Magazine.

Simon Bridgland, Broker/ Director at Release Freedom: “This is a great and useful feature if a client needs it. It will be a bit of a headline grabber for NatWest without having to lower their rates, so I’m sure they will gain and retain more business as a result of it. The best part is for existing mortgage account holders, many of whom will be self-employed, who perhaps would like to utilise the feature at some point in the future. Will more lenders follow suit? HSBC has a similar 25% feature on some new products, but for a lender to offer it to existing clients is new to me.”

Scott Taylor-Barr, Financial Adviser at Carl Summers Financial Services: “Although there are not many people who will be able to take full advantage of this new feature, it’s still good news, as there are always those that can and also those that will have a windfall at some point. Being able to reduce your mortgage balance is a very sensible way of using your money, as the reduction in the total amount of interest you will pay over the mortgage term can be considerable.”


Lewis Shaw, Owner and Mortgage Broker at Riverside Mortgages: “This is an odd change, and I can only assume it’s something to do with implementing consumer duty by giving greater flexibility to borrowers who wish to pay off their mortgages faster without penalty. It’s a positive change if a borrower has the wherewithal to make that level of overpayment. However, it won’t make any difference for most borrowers as people are struggling to make ends meet due to the cost of living crisis, so mortgage overpayments at 20% of the outstanding balance probably aren’t high on their priority lists.”

Luke Thompson, Director at PAB Wealth Management: “I think this is good news, especially for those clients who have smaller mortgage amounts outstanding. It can be very easy for someone who has a £50,000 mortgage balance to reach their annual limit of overpayments so to have the ability to double the amount payable can only help consumers. If customers are in a position to overpay, by increasing their limit to 20% of the balance NatWest are giving people the opportunity to save thousands of pounds in interest over the life of the mortgage. Hopefully this change from one of the UK’s biggest lenders will push their competitors into looking at their overpayment policies, which would only be a good thing for consumers in the long term.”

Graham Cox, Director at “This is a real point of difference for Natwest as most lenders only allow 10% overpayment of the mortgage balance per year. Overpaying can save the borrower thousands of pounds in interest and reduce the mortgage term by years. Of course, not everyone can afford to make overpayments but it’s still nice to have the option. Particularly as taking redundancy or receiving an inheritance can often provide the means.”


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