Mortgage Overpayment Calculator
See how much interest you'd save - and how many years you'd shave off your mortgage - by paying a bit extra each month, dropping in a lump sum, or both.
Why overpaying punches above its weight
Every pound you overpay comes straight off the balance, which means the lender can never charge interest on it again - for the rest of the term. That compounding-in-reverse is why modest overpayments produce outsized savings. On a £180,000 balance at 4.5% with 22 years left, overpaying £150 a month saves roughly £22,000 of interest and clears the mortgage just over four years early.
Check your overpayment allowance first
Most fixed-rate deals let you overpay up to 10% of the balance per year without penalty (a few lenders allow 20%). Go over that and you'll trigger an early repayment charge, typically 1-5% of the excess - easily enough to wipe out the benefit. Trackers and SVR mortgages usually have no cap. The allowance and the ERC schedule are both in your mortgage offer document.
Overpay the mortgage, or save instead?
The comparison is simple in principle: overpaying "earns" you your mortgage rate, tax-free and risk-free. If your mortgage costs 4.5% and the best easy-access savings account pays 4% before tax, overpaying wins. (Savings rates move with the Bank of England base rate, so it's worth re-checking the comparison whenever that changes.) Three caveats worth taking seriously:
- Emergency fund first. Money overpaid into the mortgage is hard to get back out. Keep 3-6 months of expenses accessible before locking anything away in bricks.
- Expensive debt first. Clearing a 22% credit card beats a 4.5% mortgage every day of the week.
- Pension matching beats both. If your employer matches contributions you're not claiming, that's an instant 100% return - take it before overpaying anything.
Pound for pound, money paid off earlier saves more, because it stops accruing interest sooner. A £5,000 lump sum today typically beats £150/month for 33 months, even though the totals match. If you have savings earning less than your mortgage rate (and your emergency fund is intact), the lump sum is usually the sharper move. Try both in the calculator and compare - and if you're weighing up a remortgage at the same time, run the new deal through our mortgage calculator first so you're comparing like with like. The same overpayment logic applies to personal borrowing too; see the loan calculator for how term length drives total interest.
Frequently asked questions
How much can I overpay on my mortgage without a penalty?
Most fixed-rate deals allow 10% of the outstanding balance per year penalty-free; some lenders allow 20%. Exceeding the allowance triggers an early repayment charge of typically 1-5%. Variable and tracker deals often have no limit - check your mortgage offer.
Is it better to overpay monthly or reduce the term?
They're two routes to the same destination. Formally reducing the term locks in higher required payments; making voluntary overpayments achieves the same interest saving while letting you stop if money gets tight. Ask your lender to keep payments the same and reduce the term "in effect" - flexibility usually wins.
Should I overpay my mortgage or put money in savings?
Compare your mortgage rate with your after-tax savings rate: overpaying is equivalent to earning your mortgage rate tax-free. But keep an emergency fund, clear expensive debts first, and don't skip employer pension matching - all three usually rank ahead of mortgage overpayments.
Do overpayments reduce my monthly payment or my term?
You choose. Most lenders default to reducing the monthly payment, but reducing the effective term saves far more interest. Tell your lender explicitly that you want payments kept the same so the extra shortens the payoff date.