Mortgage Overpayment Calculator
See exactly how much interest you save and how early you will be mortgage-free by making regular monthly or one-off lump sum overpayments.
Last updated: April 2026
Why mortgage overpayments are so powerful
Mortgage overpayments are one of the highest-return financial actions available to UK homeowners with a mortgage. The effective return is your mortgage interest rate - guaranteed and tax-free. At 4.5%, paying down mortgage debt is equivalent to earning 4.5% interest in a savings account where you pay no tax on the return. Most Cash ISAs and savings accounts pay less than this after tax.
The power of overpayments is amplified by the long time horizon. Every £1 of mortgage capital you reduce today saves interest on that £1 for every remaining year of the mortgage. A £200 monthly overpayment on a £220,000 balance at 4.5% over 22 years saves approximately £22,000 in interest and clears the mortgage 3–4 years early.
Checking your early repayment charge (ERC) terms
Most fixed-rate mortgages allow overpayments of up to 10% of the outstanding balance per year without incurring an early repayment charge. On a £220,000 balance, that is £22,000 per year in penalty-free overpayments - far more than most people consider. If you want to overpay more than this, check your mortgage agreement carefully. Some trackers and SVR mortgages allow unlimited overpayments. Always call your lender if you are unsure.
Overpay versus invest: which is better?
If your mortgage rate is lower than the expected long-term return from investing (historically 6–8% for a diversified equity portfolio), investing in a Stocks and Shares ISA may generate higher returns. However, investment returns are uncertain and volatile; mortgage interest savings are guaranteed and risk-free. Most financial advisers suggest clearing high-rate consumer debt first, then considering a blend of mortgage overpayment and ISA investment based on your risk tolerance and mortgage rate.