Mortgage Overpayment Calculator
Making a £200 monthly overpayment on a £250,000 mortgage at 4.5% over 25 years saves approximately £28,000 in total interest and pays off your mortgage 4 years and 3 months early. Use our free calculator below to see your exact savings based on your balance, rate, and overpayment amount.
Figures verified against HMRC SDLT rates on .
Written by James HartleyCIMA
Calculator
Your current remaining mortgage balance.
Your current mortgage interest rate, e.g. 4.5 for 4.5%.
How many years are left on your mortgage.
Extra amount above your normal payment each month.
An immediate single overpayment, applied at the start.
Enter your mortgage details to calculate savings
See exactly how much interest you save by overpaying your mortgage each month.
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How Mortgage Overpayment Calculator Works
Every mortgage payment is split between interest (cost of borrowing) and principal (reducing your debt). In the early years, most of your payment goes to interest - meaning overpayments made now have a disproportionately large impact on your total interest cost.
How the Calculator Works
We run two separate amortization schedules side by side - one with your standard payment only, and one with your chosen overpayment added each month and/or a lump sum deducted on day one. For each month we calculate:
- Interest due: Remaining balance × (annual rate ÷ 12)
- Principal paid: Payment − Interest due
- New balance: Previous balance − Principal paid
Any extra payment goes directly to reducing the principal, which immediately lowers every future interest charge - creating a compounding saving effect.
Worked Example: £250,000 at 4.5% over 25 years
| Scenario | Monthly payment | Total interest | Payoff date | Interest saved |
|---|---|---|---|---|
| No overpayment | £1,390 | £167,042 | Mar 2050 | - |
| £200/mo overpayment | £1,590 | £138,823 | Dec 2045 | £28,219 saved |
| £500/mo overpayment | £1,890 | £102,104 | Sep 2040 | £64,938 saved |
The 10% Overpayment Rule
Most mortgage lenders in the UK allow you to overpay up to 10% of your outstanding balance per year without incurring an Early Repayment Charge (ERC). For a £250,000 mortgage that means up to £25,000 per year, or roughly £2,083/month. Always check your mortgage terms before overpaying.
Lump Sum vs Monthly Overpayments
A lump sum overpayment reduces your balance immediately, giving a slightly larger total saving than the equivalent spread over months because interest is calculated daily or monthly on the remaining balance. However, consistent monthly overpayments are often more practical and build a disciplined savings habit.
Frequently Asked Questions
The saving depends on your balance, interest rate and how much you overpay. As a rough guide: on a £200,000 mortgage at 4.5% with 20 years remaining, a £200/month overpayment saves around £18,000 in interest and pays off the mortgage 3 years earlier. Larger balances and higher interest rates amplify the benefit significantly. Use the calculator above for your exact figures.
A lump sum overpayment saves marginally more interest because it reduces your balance immediately (interest is calculated on the daily/monthly outstanding balance). However, for most borrowers the difference is small, and consistent monthly overpayments are more practical. The most important factor is making overpayments as early as possible in your mortgage term, when the interest savings compound most powerfully.
Most UK mortgage lenders allow overpayments of up to 10% of your outstanding balance per year without triggering an Early Repayment Charge (ERC). For example, on a £250,000 mortgage you could overpay up to £25,000 per year (about £2,083/month) penalty-free. Some lenders apply the 10% limit to the original mortgage balance rather than the current balance. Always check your specific mortgage terms, especially if you're on a fixed-rate deal.
This depends on your mortgage interest rate versus the savings rate available. If your mortgage rate is 4.5% and you can get 5% in a cash ISA, saving wins slightly on numbers - plus ISA interest is tax-free. However, mortgage overpayments offer a guaranteed, risk-free return equal to your mortgage rate, whereas savings rates can change. Many financial advisers recommend a split approach: max your ISA allowance then overpay any remainder.
Yes - if you're on a fixed-rate, tracker, or discount mortgage during a special-rate period, you may face Early Repayment Charges (ERCs) if you overpay beyond your lender's allowed limit (usually 10% per year). ERCs are typically 1% to 5% of the overpaid amount. On a standard variable rate (SVR) mortgage, there are usually no ERCs and you can overpay unlimited amounts. Always check your mortgage terms or call your lender before making a significant overpayment.
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Official Rates Used
This calculator uses official HMRC rates for 2026/27. View the current rates at GOV.UK:
Rates last verified:
Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.