Mortgage Overpayment Calculator
Discover how much you can save by making extra mortgage payments. Calculate the impact of regular overpayments or lump sum payments on your mortgage term and total interest paid.
Your Mortgage Details
Enter your current mortgage information to calculate overpayment benefits
Your Overpayment Savings
See how much you can save with extra payments
Your Results Will Appear Here
Fill in your mortgage details and overpayment information, then click "Calculate Savings" to see your potential savings.
Benefits of Mortgage Overpayments
- Significant Interest Savings: Even small overpayments can save thousands in interest over the mortgage term
- Shorter Mortgage Term: Pay off your mortgage years earlier and become debt-free sooner
- Increased Equity: Build equity in your property faster
- Financial Freedom: Eliminate mortgage payments and redirect money to other goals
- Peace of Mind: Reduce financial stress with lower debt levels
- Protection Against Rate Rises: Pay down principal before rates increase
Important Considerations
- Overpayment Limits: Most lenders allow 10% of the balance annually without penalties
- Early Repayment Charges: Check for ERCs, especially during fixed-rate periods
- Emergency Fund First: Ensure you have 3-6 months expenses saved before overpaying
- Higher Rate Debts: Pay off credit cards and loans first (typically higher interest rates)
- Pension Contributions: Consider if pension tax relief offers better returns
- Investment Alternatives: Compare returns from ISAs and other investments
Frequently Asked Questions
Common questions about mortgage overpayments
How much can I overpay without penalties?
Most UK lenders allow you to overpay up to 10% of your outstanding mortgage balance each year without early repayment charges. This resets annually, so you get a fresh 10% allowance each year. However, some lenders offer higher allowances, and others may have restrictions during fixed-rate periods.
Should I overpay or invest the money instead?
This depends on your mortgage rate versus potential investment returns. If your mortgage rate is 5%, you need investments to return more than 5% after tax to beat overpaying. Consider your risk tolerance, tax situation, and the guaranteed nature of mortgage overpayment savings versus uncertain investment returns.
Can I reduce my monthly payments instead of the term?
Yes, when you overpay, you can usually choose to either reduce the remaining term (keeping payments the same) or reduce monthly payments (keeping the same end date). Reducing the term typically saves more interest overall, but reducing payments can improve monthly cash flow.
What happens if I can't afford overpayments later?
Overpayments are not contractual obligations - you can start and stop them at any time. If your financial situation changes, you can simply revert to your normal monthly payment. The overpayments you've already made will have permanently reduced your balance and saved interest.
Is it better to make regular overpayments or lump sums?
Regular monthly overpayments typically save more interest because they reduce the principal balance consistently throughout the year. However, lump sum payments made early in the mortgage term can also be very effective. The best approach often depends on your cash flow and when funds become available.