Calculate how much you could save by making regular overpayments on your mortgage
This calculator provides estimates for educational purposes. Results are simplified and do not account for all variables such as interest rate changes at remortgage. Always consult a qualified mortgage adviser.
A mortgage overpayment is any amount you pay above your required monthly payment. The extra money goes directly towards reducing your mortgage principal, which means you pay less interest over the life of the loan and can become mortgage-free sooner.
Most UK lenders allow you to overpay up to 10% of your outstanding balance per year without penalty on fixed-rate mortgages. On a £250,000 mortgage, that is £25,000 per year or about £2,083 per month. Variable rate and tracker mortgages often allow unlimited overpayments.
In the current interest rate environment, overpaying your mortgage is often more beneficial than keeping money in a savings account. If your mortgage rate is 4.5% and your savings account pays 3%, you effectively earn 4.5% (tax-free) by overpaying. The decision is clear when mortgage rates exceed savings rates.
However, always maintain an emergency fund of 3-6 months' expenses before making overpayments. Most overpayments cannot be withdrawn.