TL;DR
See the possible effect of regular overpayments
An overpayment reduces the balance faster and can lower total interest or shorten the mortgage term. The calculator compares the scheduled repayment with a higher monthly payment.
It does not check your lender allowance, Early Repayment Charge, daily interest method or whether saving, investing or repaying other debt would be better for you.
Calculator / tool
Set your figures and see the estimate
How mortgage overpayments work
Regular overpayments add to each scheduled payment. A lump sum reduces the balance at one point in time. What happens next can depend on whether the lender reduces the term, recalculates the payment or keeps the existing schedule.
The calculator assumes the same monthly overpayment is made from now until the mortgage is repaid, the interest rate you enter stays the same for the whole remaining term, and your lender keeps your payment and shortens the term. It does not deduct any Early Repayment Charge. If your lender lowers your monthly payment instead, or your rate changes when a fixed deal ends, the interest saved and the term reduction will be different.
- Regular overpayment: a fixed extra amount each month.
- Lump sum: a one-off reduction in balance.
- Lower balance: less interest may accrue in future.
- Term or payment: treatment depends on the lender.
Early Repayment Charges and annual allowances
Many mortgage products allow some penalty-free overpayment, sometimes expressed as a percentage each year, but there is no universal 10% rule. The allowance, measurement period and ERC depend on the lender and product.
Overpaying versus saving elsewhere
Keep an emergency fund and consider expensive unsecured debt before committing spare cash. Savings interest, pension or investment objectives, tax and access to cash can change the comparison; seek regulated advice where appropriate.
Example regular overpayment
A borrower with £200,000 outstanding at 4.5% over 20 years adds £200 a month to the normal repayment. Assuming the rate stays the same and the lender shortens the term, the calculator gives the rounded estimates below. Your lender's figures are the ones that count.
- Balance
- £200,000
- Rate and remaining term
- 4.5% / 20 years
- Normal monthly payment
- about £1,265
- Payment with overpayment
- about £1,465
- Term reduction
- about 4 years
- Interest saved
- about £22,900
- Before paying
- Check allowance and ERC
Official sources
Frequently asked questions
Can I overpay any mortgage?
Many mortgages allow overpayments, but the amount and timing vary. Check the current mortgage offer, annual statement or lender before transferring extra money.
Is the annual allowance always 10%?
No. Some products use 10%, but others use a different percentage, balance definition or reset date. A tracker or variable product may also have different conditions.
What is an Early Repayment Charge?
An ERC is a charge that may apply when you repay more than the permitted amount or redeem during a deal period. The formula and expiry date should be shown in the mortgage documents.
Is a lump sum better than monthly overpayments?
Paying a lump sum earlier can reduce the balance sooner, so less interest builds up afterwards. Keeping access to emergency cash and staying within your penalty-free allowance also matter. This calculator models regular monthly overpayments only; for a lump sum, ask your lender for an illustration and confirm how they will apply the payment.
Will an overpayment reduce my term automatically?
Not always. Some lenders keep the payment and reduce the term, while others recalculate the payment or require an instruction. Ask the lender how the account will be treated.
Should I overpay or keep money in savings?
Compare the mortgage rate, savings return, tax, emergency fund and need for access. The best choice depends on personal circumstances and may require financial advice.