Personal Finance
Mortgage Overpayment Savings Calculator
Compare a repayment mortgage with a fixed extra monthly payment. Simple model, not a lender illustration.
Does overpaying save much?
Overpaying a mortgage can shorten the term and cut total interest, but rules on overpayment allowances, early repayment charges and offset products vary by lender. This calculator illustrates how extra payments might reduce interest under simple assumptions. Keep an emergency buffer before you lock cash into the property — overpaying is hard to reverse. It is not advice from a mortgage broker or your lender — confirm charges and whether overpayments reduce term or payment before you act. Compare household cash trade-offs with monthly payment comparison. Rate, risk tolerance and tax on alternative investments sit outside this page; speak to a regulated adviser if unsure. Offset mortgages change the logic because spare cash reduces interest without leaving the account — model those products with your lender’s tools instead of a generic overpayment sketch. When rates are variable, revisit the decision after each change letter. Keep evidence of overpayments in case statements take time to reflect the new balance.
Worked example
Illustrative interest-only sketch: on a balance where monthly interest is significant, an extra £200 a month can shave years off a repayment mortgage and thousands in interest over the life of the loan — exact figures depend on rate and remaining term. If your deal allows only 10% overpayment per year without an ERC, plan lump sums inside that cap.
Limits and assumptions
Simple models omit payment holidays, rate switches and offset interest calculations. Early repayment charges can erase savings if you overpay beyond the allowance. Not a personalised mortgage illustration.
Frequently asked questions
Will overpaying always save money?
It often reduces interest if your rate exceeds what you would earn after tax elsewhere, but emergency cash buffers matter too.
What is an overpayment allowance?
Many fixed deals let you overpay a percentage each year without an early repayment charge. Check your offer document.
Should I overpay or invest instead?
That depends on rate, risk tolerance and tax — speak to a regulated adviser if unsure. This tool only shows mortgage maths.
Does overpaying reduce payment or term?
Ask your lender which applies. Many default to shorter term; some let you choose.
Can I overpay from a bonus?
Yes if within allowances — confirm ERC rules before sending a large lump sum near the anniversary limit.