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Additional Acquisition Payment allowances & Early Settlement Premiums

Between 1 Feb and 31 Jan, you can make Additional Acquisition Payments up to 10% of your balance. If you exceed this allowance, a 2% Early Settlement Premium applies to the amount you pay over the limit.

Additional Acquisition Payment allowances and Early Settlement Premiums

Your annual Additional Acquisition Payment allowance

Each year, between 1 February and 31 January, you can make Additional Acquisition Payments of up to 10% of your outstanding balance as of 1 February. This is your annual allowance. If you pay more than your allowance, an Early Settlement Premium (ESP) of 2% will apply to the amount over the 10% limit.

Important points about your allowance:

  • Your allowance resets every 1 February.
  • Any unused allowance does not carry over into the next year.
  • If you pay more than your allowance, an Early Settlement Premium (ESP) of 2% will apply to the amount over the 10% limit.

Minimum Additional Acquisition Payment

The minimum you can pay is based on your outstanding balance:

  • If your balance is more than £20,000, the minimum payment is £2,000.
  • If your balance is less than £20,000, the minimum payment is 10% of your balance.
    • Example: If your balance is £15,000, the minimum payment is £1,500.

Any payment you make will be assessed against your annual allowance. If you pay more than your allowance, an Early Settlement Premium may apply (see below examples).

Early Settlement Premium (ESP)

If you make payments above your annual 10% allowance, a 2% Early Settlement Premium will apply only to the excess amount.

Examples

Additional Acquisition Payment Examples Example A Example B
Outstanding balance as of 1 February £15,000 £70,000
10% annual allowance £1,500 £7,000
Minimum allowable payment £2,000 £2,000
Amount above allowance £500 £0
ESP at 2% £10 £0

 

 

Frequently asked questions

We answer some frequently asked questions about home finance.