How the mortgage overpayment calculator works
Mortgage interest is charged on the balance you still owe, normally worked out monthly at one twelfth of the yearly rate. Any extra you pay goes straight off that balance, so every month afterwards you are charged interest on a smaller amount. Your normal payment stays the same, but more of it goes on the loan and less on interest, and the mortgage ends early.
The calculator works out your normal monthly payment from the balance, rate and years left using the standard repayment formula. It then runs through the mortgage month by month twice: once as it is, and once with your extra payments. A lump sum is taken off the balance straight away. The difference in total interest between the two runs is your saving.
B = balance, r = yearly rate ÷ 12, n = months left
Worked example: £200,000 at 4.5% with 25 years left
- Normal payment: £1,111.66 a month, with £133,499 of interest over 25 years
- Overpaying £100 a month: interest falls to £112,358, a saving of £21,142, and the mortgage is cleared in 21 years 6 months, 3 years 6 months early
- A £10,000 lump sum instead: saves £19,300 and clears it in 22 years 10 months
- £200 a month plus a £5,000 lump sum: saves £42,788 and you are mortgage-free in 18 years 2 months
Small regular overpayments started early tend to beat a bigger lump sum paid years later, because the saving compounds over the whole remaining term.
The 10% overpayment limit
Most fixed-rate and tracker deals let you overpay up to 10% of your balance each year without paying an early repayment charge (ERC). Some lenders measure this per calendar year, others per year of the deal, and unused allowance usually does not roll over. If you go over, the ERC is often 1% to 5% of the amount above the limit, which can wipe out the saving. On a standard variable rate, or once your deal has ended, there is normally no limit.
On a £200,000 balance a 10% allowance is £20,000 a year, so £100 a month (£1,200 a year) is comfortably inside it. The calculator flags it if your first-year overpayments go over the percentage you enter.
Shorter term or lower payments?
When you overpay, lenders usually either keep your payment the same so the term shortens, or recalculate a lower monthly payment over the original term. This calculator shows the first option, which saves the most interest. If your lender lowers your payment automatically after a lump sum, ask them to keep it the same if you want to finish sooner.
Overpaying versus saving
| Situation | Usually better |
|---|---|
| Mortgage rate higher than your after-tax savings rate | Overpay |
| No emergency fund yet | Build savings first |
| Credit card or loan debts at higher rates | Clear those first |
| Employer matches extra pension contributions | Pension first |
Money paid into a mortgage is hard to get back, while savings stay accessible. Some lenders let you take back overpayments as a payment holiday, but not all do. Compare with the savings calculator, see the full repayment schedule in the mortgage calculator, or check whether switching deal saves more with the remortgage calculator.
Frequently asked questions
How much can I overpay my mortgage without penalty?
Most fixed-rate and tracker mortgages let you overpay up to 10% of the balance each year without an early repayment charge. On a £200,000 balance that is £20,000 a year. Standard variable rates usually have no limit.
How much will I save by overpaying £100 a month?
On a £200,000 mortgage at 4.5% with 25 years left, £100 a month extra saves £21,142 in interest and clears the mortgage 3 years 6 months early.
Is it better to overpay monthly or in a lump sum?
The sooner money goes in, the more it saves. A lump sum today saves more than the same total paid monthly over several years, but regular overpayments are easier to afford and still cut years off the term.
Does overpaying reduce my monthly payment?
It depends on the lender. Some keep the payment the same so you finish earlier, others lower the payment and keep the term. Keeping the payment the same saves the most interest.
Should I overpay my mortgage or save?
If your mortgage rate is higher than the after-tax rate on your savings, overpaying usually comes out ahead. Keep an emergency fund first, since overpayments are hard to get back.
Last reviewed October 2026 using 2026/27 figures. This calculator gives an estimate for guidance only.