Mortgage Overpayment Calculator
See how much time and interest you save by overpaying your mortgage.
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About the Mortgage Overpayment Calculator
Overpaying your mortgage is one of the most powerful financial moves available to UK homeowners. Unlike savings accounts, the "return" on overpayments is guaranteed — it equals your mortgage interest rate. With a 5% mortgage, every £1,000 you overpay earns a certain 5% return (tax-free), which beats the after-tax return on most savings accounts at equivalent rates unless you are a non-taxpayer.
The maths are compelling: on a £200,000 mortgage at 5% with 20 years remaining, an extra £200/month overpayment saves approximately £28,000 in interest and cuts 6 years from the term. The saving grows non-linearly because every overpayment reduces the principal on which future interest is charged, creating a compounding effect in reverse.
The key caveat is early repayment charges (ERCs). Most fixed-rate mortgages allow 10% of the outstanding balance in overpayments per year without penalty. Exceeding this limit can trigger ERCs of 1–5% of the excess amount. Always check your mortgage terms before overpaying, and speak to your lender to confirm the exact limit. This calculator assumes no ERCs — use the insight as a planning tool and verify with your lender.
How it works
Standard mortgage amortisation: Monthly payment PMT = P × r(1+r)^n / ((1+r)^n - 1) With overpayment, solve iteratively: Each month: new_balance = balance × (1 + r) - (PMT + extra) Count months until balance ≤ 0 Savings = (original_total_paid) - (overpayment_total_paid)
Tips to improve your result
- 1.
Even a one-off lump sum overpayment significantly reduces total interest. £10,000 overpaid on a £200,000 mortgage at 5% with 20 years remaining saves approximately £15,000 in interest.
- 2.
Many lenders allow a 10% annual overpayment without penalty. On a £200,000 balance, that's £20,000/year — a substantial flexibility window.
- 3.
If your savings interest rate (after tax) is lower than your mortgage rate, overpaying beats saving. At a 5% mortgage and 4% net savings interest, overpaying wins by 1% guaranteed.
- 4.
Consider offset mortgages as an alternative — your savings balance offsets your mortgage balance for interest calculation, giving the equivalent return on savings without actually making overpayments.
- 5.
When remortgaging, the new term can reset your amortisation. Request a shorter term on remortgage if you've been overpaying — it locks in the benefit and reduces the temptation to "reborrow" the equity.