Tax Worked OutOverpayments, lump sums and early repayment
Mortgage Overpayment Calculator
Overpaying cuts the interest you pay: £100 a month extra on £200,000 at 4.5% over 25 years saves about £21,142 and clears it 3 years 6 months sooner. Enter your own mortgage to see yours.
Interest you could save
- Time saved
- 3 years 6 months
- Final payment
- March 2048, not September 2051
- New monthly payment
- –
Overpaying £25,700 in total saves about £21,142 in interest and clears your mortgage 3 years 6 months sooner.
Over your yearly allowance
Allowance from MoneyHelper · checked
This is an estimate only, not mortgage advice. Your lender works out interest in its own way, and your lender’s rules and mortgage offer decide what you can overpay and any charges. For free, impartial guidance, see MoneyHelper.
| Year | With overpaying | Without |
|---|
Bars show the balance left as a share of what you owe now. Interest is the interest paid in that year.
Quick answers
- How much can I overpay?
- Many lenders let you overpay up to 10% of your balance a year without a charge, but limits differ, so check your mortgage offer.
- Shorter term or lower payment?
- Keeping the same payment saves the most interest: a £10,000 lump sum on £200,000 at 4.5% over 25 years saves £19,196 that way, against £6,649 if you lower the payment instead.
- Monthly overpayments or a lump sum?
- Both cut interest. Money paid sooner saves more, because interest is then charged on a smaller balance for longer.
- Do overpayments cut the interest I pay?
- Yes. Interest is charged on what you owe, so a smaller balance means less interest: £100 a month extra on £200,000 at 4.5% over 25 years saves £21,142.
- Will I pay an early repayment charge?
- You could, if you pay more than your lender allows or pay off your mortgage early. Your mortgage offer explains any charges.
Mortgage overpayment examples
Each row starts from the same £200,000 at 4.5% over 25 years, a monthly payment of £1,111.66. Choose "Try it" to load a row into the calculator.
| Overpayment | Interest saved | What changes | Try it |
|---|---|---|---|
| £100 a month extraTry it | £21,142 | 3 years 6 months sooner | Try it |
| £200 a month extraTry it | £36,280 | 6 years 1 month sooner | Try it |
| £10,000 lump sum nowTry it | £19,196 | 2 years 2 months sooner | Try it |
| £10,000 lump sum now, lower paymentTry it | £6,649 | £1,055.98 a month instead of £1,111.66 | Try it |
How overpaying a mortgage works
Each month your lender adds interest to what you owe, then your payment comes off. An overpayment is extra money that comes straight off the balance, so next month's interest is worked out on a smaller amount.
- Monthly interest is a twelfth of the yearly rate, charged on the balance.
- Your regular payment pays that interest and some of the balance.
- Any overpayment then comes off the balance in the same month.
- In the last month you pay only what is left, so the final payment is smaller.
On £200,000 at 4.5% over 25 years, the payment is £1,111.66 and you would pay £133,499 in interest in total. Adding £100 a month cuts that to £112,358, a saving of £21,142, and the mortgage ends 3 years 6 months sooner.
Some lenders charge interest daily and some yearly. If your lender charges interest daily, paying sooner helps. If it charges yearly, time the overpayment so it counts in that year’s interest. This calculator charges interest monthly, so your lender’s figures may differ a little.
One tool covers each case: use it as a mortgage early repayment calculator, an early mortgage payoff calculator or a mortgage lump sum calculator by entering a monthly amount, a lump sum, or both.
Shorter term or lower payment?
Pay it off sooner: you keep paying the same amount each month, so the overpayment shortens the mortgage. This saves the most interest. A £10,000 lump sum on £200,000 at 4.5% over 25 years saves £19,196 and ends the mortgage 2 years 2 months sooner.
Lower my monthly payment: the end date stays the same and your payment is worked out again on the smaller balance. The same £10,000 lowers the payment from £1,111.66 to £1,055.98 a month and saves £6,649 in interest.
Ask your lender which of these it does with an overpayment, and whether you can choose.
Monthly overpayments or a lump sum?
Regular overpayments add up over the years, and a lump sum works hardest when it is paid early. On £200,000 at 4.5% over 25 years:
- £100 a month extra saves £21,142 and ends 3 years 6 months sooner.
- £200 a month extra saves £36,280 and ends 6 years 1 month sooner.
- A £10,000 lump sum now saves £19,196 and ends 2 years 2 months sooner.
You can use both at once: enter a monthly amount and a lump sum, and choose the month the lump sum is paid.
Overpayment limits and early repayment charges
Many lenders let you overpay up to 10% a year without a penalty (MoneyHelper). The calculator starts at 10% of your balance at the start of each year. Change it to your own lender’s limit, which is in your mortgage offer.
If you pay more than the limit, or pay off your mortgage early, your lender could charge you an early repayment charge. Enter the charge as a percentage and how many years it lasts, both from your offer, and the calculator estimates it on the amount above your allowance.
Flexible and offset mortgages let you overpay and draw the money back later without a charge. Ask your lender if yours works this way.
Overpay or keep it in savings?
Money you overpay saves interest at your mortgage rate. Money in savings earns interest, but you may pay tax on it. MoneyHelper says saving may make more sense if you can get a better return than your mortgage rate, so compare the two after tax.
Depending on your Income Tax band, you get a Personal Savings Allowance: £1,000 of interest tax-free for basic rate taxpayers, £500 for higher rate and £0 for additional rate. Interest above it is taxed at your usual rate (20%, 40% or 45%). You do not usually pay tax on interest in an ISA. Scotland uses the same savings tax as the rest of the UK.
Overpay or save?
Add an overpayment and a savings rate to compare.
- Mortgage interest avoided in a year
- Savings interest after tax in a year
Personal Savings Allowance £1,000 basic rate, £500 higher rate, £0 additional rate. Sources: GOV.UK savings allowance, GOV.UK Income Tax rates · checked
The box compares the first year’s overpayments as if held for a full year, and assumes no other savings interest uses your allowance. Savings and mortgage rates change, so check again when either changes.
Before you overpay
- Keep an emergency fund: MoneyHelper suggests enough to keep you going for at least 3 months before paying off your mortgage early.
- Pay off more expensive debts first, such as credit cards, catalogue accounts and loans with higher rates than your mortgage.
- Think about your pension. Tax relief, and employer payments into a workplace pension, can be worth more than the mortgage interest you would save.
- If you have a family or others who rely on you, think about life cover.
- Check your fixed rate or deal: your mortgage offer explains any early repayment charges and your overpayment limit.
Buying a home? Work out the total cost of buying with our stamp duty calculator, and see what first-time buyers pay in stamp duty.
Sources and checks
- MoneyHelper: Should you pay off your mortgage early? (overpayment limits, charges and what to check first)
- GOV.UK: Tax on savings interest (Personal Savings Allowance)
- GOV.UK: Income Tax rates and allowances
- GOV.UK: Scottish Income Tax (savings interest taxed at UK rates)
Checked . The maths is standard monthly repayment maths, tested against MoneyHelper's own example.
Questions people ask
How does a mortgage overpayment calculator work?
It runs your mortgage month by month, twice: once as it is and once with your overpayments. On £200,000 at 4.5% over 25 years, the payment is £1,111.66 and you would pay £133,499 in interest in total. Adding £100 a month cuts that to £112,358, a saving of £21,142, and the mortgage ends 3 years 6 months sooner.
How much do I save by overpaying £100 a month?
On £200,000 at 4.5% over 25 years, about £21,142 in interest, and the mortgage ends 3 years 6 months sooner. Doubling it to £200 saves about £36,280.
Can I overpay 10 percent per year?
Many lenders allow up to 10% of the balance a year without a charge, but not all do. Your mortgage offer gives your limit; enter it in the calculator to see a warning if you go over.
How do I work out an early repayment charge?
Your mortgage offer explains any early repayment charge. Enter it as a percentage in the calculator with how many years it lasts, and it estimates the charge on the amount above your allowance. Your lender confirms the exact figure.
Should I reduce my term or my monthly payment?
Reducing the term saves more interest. Lowering the payment gives you more spare money each month. With a £10,000 lump sum on £200,000 at 4.5% over 25 years, the difference is £12,547 in interest.
Is it better to overpay my mortgage or save?
Compare your mortgage rate with what your savings earn after tax. A basic rate taxpayer pays no tax on the first £1,000 of interest a year, a higher rate taxpayer on the first £500. Keep an emergency fund either way.
Can I get money back after overpaying?
Only with a flexible or offset mortgage, which let you draw back money you have overpaid. Otherwise, ask your lender before you pay.