Mortgage overpayment calculator

Shows how regular overpayments or a one-off lump sum shorten your mortgage and cut the interest you pay.

Assumptions

The rate stays the same for the rest of the term, and overpayments shorten the mortgage rather than lowering the monthly payment. Many fixed-rate deals limit how much you can overpay each year before an early repayment charge applies, so check your lender's terms first.

Why overpaying works

Interest is charged on the outstanding balance, usually calculated daily. Every pound you pay above the normal instalment goes straight to the balance, so the next day's interest is charged on a slightly smaller amount. Over years the effect compounds: the overpayment saves not just its own interest but the interest on the interest it would have generated. The earlier in the term you overpay, the larger the saving, because that's when the balance (and therefore the interest) is highest.

Worked examples: £200,000 at 4.5% over 25 years

Normal payment £1,112 a month; total interest without overpaying £133,500.

Overpayment	Cleared in	Time saved	Interest saved
£100 a month	21 years 6 months	3 years 6 months	£21,100
£200 a month	18 years 11 months	6 years 1 month	£36,300
£10,000 lump sum now	22 years 10 months	2 years 2 months	£19,300
£10,000 now plus £100 a month	19 years 9 months	5 years 3 months	£36,400

The lump sum and the £100 monthly overpayment save similar amounts over the term, but the lump sum costs £10,000 today and the monthly route costs £25,800 spread over 21 years. Which is better depends on whether you'd otherwise earn more than 4.5% after tax on the £10,000.

Overpaying versus saving

Overpaying a mortgage at 4.5% is equivalent to earning 4.5% tax-free on the money, with no risk. Compare that with what a savings account pays after tax: basic-rate taxpayers have a £1,000 Personal Savings Allowance, higher-rate taxpayers £500, and savings interest above it is taxed at your marginal rate (GOV.UK). If the mortgage rate is higher than your net savings rate, overpaying wins on arithmetic. Two things argue the other way: keep an emergency fund you can reach (most lenders won't let you borrow overpayments back), and clear more expensive debt first. If your mortgage rate is well below savings rates, an offset mortgage may give you both.

Early repayment charges

Most fixed and some tracker deals allow overpayments of 10% of the outstanding balance per year without penalty, though some lenders allow more and a few less. Above the allowance an early repayment charge applies, typically 1–5% of the amount overpaid, highest in the first year of the deal. The charge and the allowance are in your mortgage offer and on the lender's annual statement. Once the deal ends and you're on the lender's standard variable rate, overpayments are usually unlimited, so the months between the end of a fix and a remortgage are a common window for a lump sum.

Reduce the term or reduce the payment?

Lenders apply overpayments in one of two ways. Reducing the term, as this calculator assumes, keeps the payment the same and clears the mortgage sooner; it saves the most interest. Reducing the payment keeps the term and lowers what you pay each month, which can help cash flow but saves less. Tell the lender which you want: the default varies.

Common questions

Is it better to overpay monthly or in one lump sum?

Per pound, earlier is better, so a lump sum now beats the same total spread over years. Monthly overpayments win on flexibility: you can stop if money gets tight.

Should I overpay or build a pension?

Pension contributions attract tax relief at your marginal rate and often an employer match, which can outweigh the mortgage rate; the trade-off is that the money is locked until at least 55 (57 from 2028). This is a question for a regulated adviser, not a calculator.

Can I get overpayments back?

Some lenders offer a borrow-back or payment-holiday facility funded by past overpayments; most don't. Assume the money is gone unless your mortgage terms say otherwise. For readily accessible money, an offset mortgage is the alternative.

Does overpaying help me remortgage?

Yes: it lowers your loan-to-value, which can move you into a cheaper rate band at the next remortgage.

Sources checked 13 October 2026.

Other calculators

Estimates only, not advice. These calculators do arithmetic on the numbers you enter. They don't check your credit file, apply a lender's affordability rules or know which products you qualify for. Nothing you type is stored or sent anywhere. For a figure you can act on, speak to an FCA-authorised mortgage adviser.