Mortgage Overpayment Calculator

Quick answer

Overpaying a mortgage by even £100 a month can cut years off the term and save tens of thousands in interest, because every pound overpaid stops compounding against you for the rest of the loan. On a £200,000 mortgage at 5% over 25 years, £100 a month saves roughly £24,505 of interest.

Start with the calculator above

Pop in your current mortgage balance, your interest rate, the years left on the term and the overpayment you are considering. The tool above does the heavy lifting and shows your interest saved and the time shaved off. The sections below explain exactly how that result is reached, so you can trust the figure rather than take it on faith.

How a mortgage overpayment calculator works

A repayment mortgage charges interest on the balance you still owe. Every month, part of your payment covers that month's interest and the rest chips away at the capital. Early on, most of your payment is interest because the balance is large. An overpayment goes straight onto the capital, so it shrinks the balance that all future interest is charged on. That is why a small extra payment today can save a disproportionate amount of interest over the years.

The monthly interest is worked out like this:

Monthly interest = outstanding balance × (annual rate ÷ 12)

So on a £200,000 balance at 5% the first month's interest is 200,000 × (0.05 ÷ 12) = £833.33. If your normal payment is £1,170, then £833.33 covers interest and £336.67 reduces the balance. Add a £200 overpayment and £536.67 comes off the capital instead. Next month interest is charged on a smaller figure, and the gap compounds in your favour.

There are two ways lenders apply an overpayment, and it matters which you pick:

• Reduce the term — you keep paying the same monthly amount, so the mortgage clears sooner. This usually saves the most interest.
• Reduce the monthly payment — the term stays the same but your future payments drop. Helpful for monthly cash flow, but it saves less interest overall.

Most calculators, including the one above, assume you keep the payment the same and shorten the term, because that is where the big savings sit. If you want to model regular monthly extras alongside the standard repayment, our mortgage repayment calculator and mortgage calculator show how the base monthly figure is built before any overpayment.

Worked example: a £200 monthly overpayment

Take Priya and Sam, who owe £180,000 at 4.5% with 22 years left. Their contractual payment is about £1,113 a month. They decide to overpay £200 every month.

• Normal path: paying £1,113 for 22 years means roughly £113,000 in total interest.
• Overpaying £200 a month: the £1,313 total payment clears the mortgage in around 18 years instead of 22.
• Result: roughly four years saved and tens of thousands of pounds of interest avoided, because every extra £200 stops accruing interest for the remaining life of the loan.

The exact saving depends on your rate and balance, which is why the live tool above is more precise than any rule of thumb. The pattern holds though: regular overpayments early in the term are the most powerful, because they have the longest time to compound.

Worked example: a one-off lump sum

Now imagine Tom inherits £10,000 and puts it all onto a £150,000 mortgage at 5% with 20 years to run. That single payment removes £10,000 of capital that would otherwise have been charged 5% interest every year for two decades. Over the full term that one lump sum can save well over £8,000 in interest and bring the end date forward by more than a year, without Tom changing his monthly budget at all.

Compare that with leaving the £10,000 in easy-access savings. If your mortgage rate is higher than the interest you can earn after tax, overpaying usually wins. Check what your savings could earn first with our savings calculator and see how interest builds over time using the compound interest calculator, then put the two side by side.

Overpay or save? How to decide

The core test is simple: compare your mortgage rate with the after-tax return on the alternative use of the money.

• If your mortgage rate is higher than what savings pay you after tax, overpaying is effectively a guaranteed, tax-free return at your mortgage rate.
• If savings or investments pay more after tax, your money may work harder elsewhere — but that return is not guaranteed, whereas the mortgage saving is.

Tax matters here. Savings interest is taxable above your Personal Savings Allowance, which for 2026/27 is £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, with no allowance for additional-rate taxpayers. Overpaying a mortgage produces no taxable interest at all, which quietly tilts the maths towards overpayment for many people. You can check where you stand with our personal savings allowance calculator.

Before overpaying, most advisers suggest clearing higher-interest debt and keeping an emergency fund. If you are remortgaging anyway, factor overpayments into the new deal — our remortgage calculator helps you compare. The free, impartial guidance at MoneyHelper is a good starting point too.

Watch the early repayment charge

Most fixed and discounted deals let you overpay up to 10% of the outstanding balance each year without penalty. Go over that and you may face an early repayment charge (ERC), often 1% to 5% of the amount overpaid, which can wipe out the interest saving. Always check your mortgage offer or ask your lender for your annual overpayment allowance before sending a large lump sum.

The 10% allowance is usually based on the balance at the start of each year and resets annually, so spreading a big overpayment across two calendar years can keep you penalty-free. Lenders authorised by the Financial Conduct Authority must set out these terms clearly in your mortgage illustration.

Common mistakes people make when overpaying

• Breaching the 10% cap. The single most expensive error. A £20,000 overpayment on a deal that only allows £15,000 penalty-free could trigger an ERC on the excess.
• Choosing to cut the payment when you wanted to cut the term. Tell your lender explicitly. The default is not always the one that saves the most interest.
• Emptying the emergency fund. Money overpaid is hard to get back unless you have a flexible or offset mortgage. Keep three to six months of essential costs accessible.
• Ignoring higher-rate debt. Clearing a credit card at 20%-plus beats overpaying a 5% mortgage every time. Sort the dearest debt first.
• Forgetting to actually apply it to capital. Some lenders hold ad-hoc payments as a credit rather than reducing the balance. Confirm the overpayment has been applied to capital and recalculated.

If you are still building your deposit or buying your first home rather than overpaying an existing loan, the mortgage affordability calculator will tell you how much you can sensibly borrow in the first place.

A quick word on regional differences

Mortgage overpayment rules are set by lenders and the FCA across the whole UK, so the 10% allowance and ERC mechanics work the same in England, Wales, Scotland and Northern Ireland. Where the nations differ is the tax on the alternatives: income tax bands diverge in Scotland, and property purchase tax is a separate tax in each nation (SDLT in England and Northern Ireland, LBTT in Scotland, LTT in Wales). Those only bite when you buy or move, not when you overpay an existing mortgage, but they are worth remembering if you are weighing overpayment against trading up.

These figures are estimates for guidance only and are not personal tax or financial advice. Your lender's actual terms, rate changes and your own circumstances will affect the outcome, so check your mortgage offer and speak to a qualified adviser before making a large overpayment.

Who should use this calculator

This exists to answer one question properly: what does overpaying actually buy me? Enter your outstanding balance, rate and years left, then a regular extra amount or a lump sum, and it shows the interest saved and the time removed from the term.

The decision it supports is whether to overpay or save instead. The rough rule is to compare your mortgage rate against the savings rate you could get after tax — overpaying is effectively a risk-free, tax-free return at your mortgage rate. When rates were 2% that comparison often favoured saving; at 5% it usually favours overpaying.

What this calculator assumes

• Overpayments reduce the capital, which shortens the term rather than the monthly payment.
• The rate entered holds for the remaining term.
• Interest accrues on the reducing balance, so earlier overpayments save disproportionately more.
• Regular and one-off overpayments can be combined, with the lump sum applied in the year you choose.

Limitations — what it does not cover

• Annual overpayment limits, typically 10% of the balance a year on a fixed deal, above which early-repayment charges apply.
• Early repayment charges of 1–5% during a fixed period — check before making a large lump-sum payment.
• Your lender’s default behaviour. Many reduce the monthly payment instead of the term unless you specifically ask, which saves far less.
• Whether you should overpay at all — higher-rate debt, an unfunded emergency buffer, or unclaimed employer pension matching usually come first.
• Offset mortgages, where savings reduce interest without committing the money.

Related calculators

To plan the bigger picture, try the early repayment calculator to model clearing the loan in full, and the mortgage calculator to rework your monthly payment after a rate change. Run a few scenarios, then come back to the overpayment tool above to lock in your plan.

What overpaying a £200,000 mortgage saves (5%, 25 years)

Weigh it against alternatives: money overpaid is locked in the house, while savings stay accessible and pension contributions get tax relief. Free guidance: MoneyHelper on overpaying.