Mortgage overpayment calculator
See how monthly or one-off overpayments could reduce your mortgage balance, shorten your mortgage term and lower the total interest you pay. Before making an overpayment, check your lender's overpayment allowance, how overpayments are applied, and whether any early repayment charges could apply.
This tool provides general guidance only. It is not a mortgage application, offer, illustration or regulated advice under Financial Conduct Authority rules. Your actual rate, borrowing and monthly payment will depend on the lender's assessment of your individual circumstances.
Speak to a Nexpad adviser for regulated mortgage adviceYour home may be repossessed if you do not keep up repayments on your mortgage.
Think carefully before securing other debts against your home. Many fixed-rate mortgages limit how much you can overpay without charge during the initial deal period, often around 10% of the balance each year. Overpaying above your allowance may trigger an early repayment charge.
How mortgage overpayments save you money
Mortgage interest is charged on your outstanding balance. When you overpay, you reduce the balance sooner than scheduled, which can reduce the amount of interest charged over the remaining term.
Regular overpayments can have a meaningful long-term impact, especially when they are made early in the mortgage term. The exact saving will depend on your mortgage balance, interest rate, remaining term, overpayment amount and whether your lender recalculates interest daily, monthly or at another point.
Before you overpay, what to check
Overpayment allowance: many fixed-rate mortgage deals allow a limited amount to be overpaid each year without penalty, often around 10%. The allowance can be based on the outstanding balance, the original loan amount, the balance at the start of the year or another method set by the lender. Check your mortgage offer or speak to your lender before overpaying.
Early repayment charges: if you overpay above your allowance during a fixed, tracker or discounted period, you may have to pay an early repayment charge. The charge is often a percentage of the amount repaid above the allowance, but the exact calculation will depend on your mortgage terms.
How the overpayment is applied: lenders may use overpayments to reduce your monthly payment, shorten your mortgage term, or hold the overpayment until a recalculation date. If your aim is to become mortgage-free sooner, ask your lender how to have the overpayment applied towards reducing the term.
Alternative uses of the money: before overpaying, consider whether you should repay higher-interest debt, keep an emergency fund, contribute to a pension or invest. The right choice depends on your mortgage rate, tax position, risk appetite, financial objectives and need for accessible savings.
Reduce the term or reduce the payment?
If you keep your monthly payment the same and reduce the mortgage term, you will usually save more interest overall because the balance is repaid faster.
If you reduce your monthly payment and keep the term the same, you may improve your monthly cash flow, but the interest saving is usually lower.
Your lender may have a default approach, so you should confirm whether your overpayment will reduce the term, reduce the monthly payment or be treated in another way.
Frequently asked questions
How much can I overpay my mortgage without a penalty in the UK?
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Many fixed-rate mortgages allow penalty-free overpayments up to a set limit, often around 10% each year, but this is not guaranteed. The allowance varies by lender and product, and may be based on the outstanding balance, original loan amount or balance at a specific date. Tracker and variable-rate mortgages may offer more flexibility, but you should always check your mortgage offer before overpaying.
Is it better to overpay my mortgage or invest the money?
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It depends on your mortgage rate, expected investment returns, tax position, financial objectives and attitude to risk. Overpaying can reduce interest and may provide a return equivalent to your mortgage rate, assuming there are no charges. Investing may produce higher returns over the long term, but returns are not guaranteed and your money can fall as well as rise. You should also consider whether you have higher-interest debts or need to keep an emergency fund.
Should I shorten my term or reduce my monthly payments?
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Shortening the term usually saves more interest overall, because your mortgage balance is repaid faster. Reducing your monthly payment can improve cash flow now, but the overall interest saving is usually lower. The calculator can help illustrate the difference, but your lender's rules will determine how overpayments are applied.
Do I pay less interest immediately if I overpay?
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Often, yes, especially where interest is calculated daily. In that case, an overpayment can reduce the balance on which interest is charged from the date it is applied. Some lenders calculate or apply interest monthly, annually or at specific recalculation points, so the timing of the saving may vary. Your mortgage offer or lender can confirm how interest is calculated.
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