Mortgage Overpayment Calculator

How Much Will Overpayments Save You?

Mortgage Information

Current Mortgage (£)

Mortgage Term (Years)

Mortgage Type

Monthly Payment (£)

Interest Rate (%)

Enter either the monthly payment or the interest rate, not both.

Overpayment Information

One-Off Payment (£)

Recurring Payment (£)

Recurring Payment Frequency

Most mortgages only allow overpayments of 10% per year. Paying more than this may incur an early repayment charge. Check with your lender before making overpayments.

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Original Mortgage

With Overpayment

Making overpayments on your mortgage can have a significant impact on the total amount of interest you pay over the life of the loan. Here’s how it works:

1. Interest Calculation:

Your mortgage interest is typically calculated daily or monthly based on the remaining balance. In the early years of a mortgage, a larger portion of your monthly payments goes toward interest, while only a smaller portion reduces the principal. This is why the total interest paid over the term of the mortgage can be substantial.

2. Effect of Overpayments:

When you make an overpayment—whether it’s a one-time lump sum or regular monthly payments—the additional amount goes directly toward reducing the principal balance of your mortgage. By reducing the principal balance faster, you decrease the amount of interest that accrues on the loan. This means that over time, more of your regular monthly payment goes toward paying down the principal rather than paying interest.

3. Shortening the Mortgage Term:

Since overpayments reduce the outstanding balance more quickly, the overall term of your mortgage can be shortened. For example, by making regular overpayments, you might be able to pay off a 25-year mortgage in 20 years or less. This early repayment not only frees you from the mortgage sooner but also reduces the total interest paid.

4. Interest Savings:

The primary benefit of overpayments is the potential interest savings. By reducing the loan balance early on, you reduce the cumulative interest that would have been paid over the life of the mortgage. Even small regular overpayments can result in thousands of pounds saved in interest over the years.

5. Important Considerations:

Before making overpayments, check with your lender to ensure you won’t incur early repayment charges. Most lenders allow up to a certain percentage (often 10%) of the outstanding balance to be overpaid each year without penalty.

Using our Mortgage Overpayment Calculator, you can see how different overpayment strategies affect your mortgage. It provides a breakdown of how much interest you could save and how many years you could potentially knock off your mortgage term.