Lump Sum Overpayment Calculator
Calculate the impact of making a one-time lump sum payment towards your mortgage. See how much interest you'll save and how much time you'll cut from your mortgage term.
Mortgage & Lump Sum Details
Enter your mortgage information and planned lump sum payment
Your Lump Sum Impact
See how your lump sum payment will affect your mortgage
Understanding Lump Sum Overpayments
What is a Lump Sum Overpayment?
A lump sum overpayment is a one-time payment made towards your mortgage principal, above your regular monthly payment. This directly reduces your outstanding balance and can significantly impact your mortgage term and total interest paid.
Benefits of Lump Sum Payments
Lump sum overpayments can save thousands in interest and reduce your mortgage term by years. The earlier you make the payment, the greater the impact, as you'll save interest on the reduced balance for the entire remaining term.
Overpayment Limits
Most lenders allow up to 10% of your outstanding balance to be overpaid annually without penalties. Check your mortgage terms before making large overpayments to avoid early repayment charges.
When to Consider Overpaying
Consider lump sum overpayments when you have spare cash, receive a bonus, inheritance, or investment return. Compare the guaranteed savings against other investment opportunities to make the best financial decision.
How to Use This Calculator
Enter Mortgage Details
Input your current outstanding balance, interest rate, and remaining term. You can find these details on your latest mortgage statement.
Set Lump Sum Amount
Enter the amount you're considering paying as a lump sum. Use the quick selection buttons for common amounts or enter a custom value.
Review Results
See the immediate impact on your mortgage, including interest saved, time reduced, and your new balance and term.
Make Informed Decision
Use the results to decide if a lump sum overpayment is right for you. Consider your other financial goals and emergency fund needs.
Frequently Asked Questions
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. However, this varies by lender and mortgage product, so check your specific terms and conditions.
Should I overpay my mortgage or invest the money?
This depends on your mortgage rate versus potential investment returns. Overpaying guarantees savings equal to your mortgage rate, while investments carry risk. Consider your risk tolerance, other debts, and emergency fund before deciding.
When is the best time to make a lump sum overpayment?
The earlier in your mortgage term you make overpayments, the greater the impact. However, ensure you have an adequate emergency fund and have paid off higher-interest debts first. Consider making overpayments after receiving bonuses, inheritance, or investment gains.
Can I reduce my monthly payments instead of the term?
Yes, many lenders offer the option to either reduce your mortgage term or lower your monthly payments after an overpayment. Reducing the term saves more interest overall, while reducing payments improves monthly cash flow. Discuss options with your lender.
What happens if I need the money back later?
Mortgage overpayments are generally irreversible - you can't withdraw the money once paid. Some lenders offer 'overpayment reserves' or flexible mortgages that allow borrowing back, but these often come with higher rates. Ensure you maintain adequate emergency funds.