Mortgage overpayment

How it works

Compare the same mortgage with and without extra payments

The calculator first models a capital-repayment mortgage from the balance, interest rate and remaining term. It then runs a second schedule with your regular and optional one-off overpayments, so the interest and repayment time can be compared on the same assumptions.

Choose “reduce term” to keep the normal scheduled payment and use overpayments to repay the balance sooner. Choose “reduce payment” to recalculate the scheduled payment as the balance falls while retaining the original end date. Your lender may handle overpayments differently, so confirm whether it reduces the term, payment or both.

Read the guide to mortgage overpayments

Understanding your result

Interest savings come from reducing the balance earlier

Mortgage interest is calculated on the outstanding balance in each modelled month. An overpayment reduces that balance sooner, which can reduce later interest. The headline saving is the difference between total interest in the original and overpayment schedules.

The balance at deal expiry can help you compare the amount that might remain when considering a new product. The estimated early repayment charge is deducted to show a simple net interest saving, but charges can outweigh some or all of the benefit during a tied-in period.

Worked example

For example, a £360,000 repayment mortgage at a fixed 4% with 23 years remaining has a modelled monthly payment of about £1,997. Paying an additional £1,000 every month from the first month, with the payment used to reduce the term, repays the modelled balance in about 12 years and 10 months.

That is approximately 10 years and 2 months earlier, with about £90,554 less interest. This assumes the 4% rate and monthly overpayment remain unchanged throughout and that no early repayment charge applies.

Assumptions and limitations

Check the mortgage offer before paying extra

The projection uses one fixed interest rate for the full remaining term. It excludes future rate changes, lender-specific rounding and payment dates, fees, payment holidays, arrears and changes to the normal payment. A lender may calculate interest or apply an overpayment at a different time.

Penalty-free allowances and early repayment charges vary by mortgage. They may be based on the original loan, the current balance, a product year or another period, and previous overpayments may use part of an allowance. The calculator’s ERC figure is a simplified estimate based on the annualised regular overpayment; it does not reproduce tiered charges or include the optional one-off payment.

Overpaying turns accessible cash into home equity. Before committing emergency savings, consider whether you may need the money, have more expensive debts, or could receive valuable employer contributions and tax relief by contributing to a pension instead.