Mortgage Overpayment Calculator
Our mortgage overpayment calculator shows precisely how much interest you save and how many months you cut from your mortgage term by making regular or lump-sum overpayments. Even small monthly overpayments can save tens of thousands of pounds in interest over a typical 25-year mortgage.
Overpayment Calculator
See how much interest you save and years you knock off by overpaying your mortgage.
How Mortgage Overpayments Work
When you make an overpayment, the excess beyond your scheduled monthly payment reduces your outstanding mortgage balance immediately. Because interest is calculated daily on most mortgages, a lower balance the next day means less interest accruing from that point forward. The compounding effect means early overpayments have a disproportionately large impact — each pound paid early saves interest not just for one month but for every month remaining on the mortgage.
On a £200,000 mortgage at 4% over 25 years, the standard monthly payment is £1,056. Overpaying by just £100 per month saves approximately £14,000 in total interest and cuts the mortgage term by 2 years and 7 months. Overpaying by £200 per month saves around £25,000 and shortens the term by 4 years 8 months — while costing only £2,400 per year in additional outgoings.
The 10% Annual Overpayment Rule
Most fixed-rate mortgages allow you to overpay up to 10% of the outstanding balance each year without incurring an Early Repayment Charge (ERC). On a £200,000 mortgage, this is £20,000 per year in allowed overpayments. Exceeding the limit triggers an ERC — typically 1–5% of the amount overpaid — so it is important to track overpayments during any fixed period. Variable and tracker mortgages usually allow unlimited overpayments without charge.
If you have a lump sum to deploy — an inheritance, bonus, or savings — and your mortgage allows it, a one-off overpayment is one of the most guaranteed returns available: you save interest at whatever your mortgage rate is, risk-free. Our Savings Calculator can help you compare the returns from overpaying versus saving or investing the lump sum.
Frequently Asked Questions
This depends on your mortgage rate and the expected investment return. If your mortgage rate is 4.5% and you expect investments to return 7% per year, investing may produce better long-term returns — but investment returns are uncertain and taxable (above ISA allowances), while mortgage interest savings are guaranteed and tax-free. Most financial planners suggest a balance: maximise employer pension matching first, then consider splitting additional funds between mortgage overpayments and an ISA.
With most lenders, overpayments reduce the outstanding balance and therefore the interest charged — but the scheduled monthly payment stays the same, meaning more of it goes toward capital. The effective result is a shorter term. Some lenders allow you to request a payment recalculation to reduce your monthly amount instead, which reduces your term less but improves monthly cash flow.
Yes, though the mechanics differ. On an interest-only mortgage, any overpayment reduces the outstanding capital and therefore the interest charged each month. However, you should check whether your lender applies overpayments to capital or holds them as payment credits.
SVR mortgages typically allow unlimited overpayments with no ERC. If you are on your lender’s SVR, you are likely paying a higher rate than necessary — consider our Compare Two Mortgages tool to assess whether switching to a new fixed deal would save more than overpaying at the current SVR.
Contact your mortgage lender directly — most allow overpayments online, by phone, or by increasing your standing order. Always confirm that the payment is designated as an overpayment and applied to your outstanding balance, not held as an advance payment of future monthly instalments.
Enter outstanding balance, current interest rate, and remaining term. Then add a monthly overpayment amount. Overpayments reduce the outstanding capital, which reduces the interest charged in every subsequent month — the benefit compounds. Early overpayments save more than later ones because the saving applies over a longer remaining term. Check your mortgage terms before overpaying: most fixed-rate deals allow up to 10% of the outstanding balance per year without early repayment charges. On a variable or tracker mortgage, there is typically no restriction. The calculator shows total interest saved and term reduction from the overpayment — for most borrowers, the combination of these two figures makes the case for overpayment compelling.
Important Information
This calculator is provided for general information and planning purposes only. It does not constitute financial or tax advice and should not be relied upon as such. Figures are indicative estimates based on simplified, publicly available criteria and stated assumptions. Actual results depend on your full circumstances. See our Disclaimer for further information.