How much do I save by overpaying £200 a month?

On a £200,000 mortgage at an example rate of 4.5% over 25 years, £200 a month extra saves £36,280.39 of interest and clears the mortgage 6.08 years early — 18.92 years instead of 25.

Is overpaying by £50 a month worth it?

Yes. On the same £200,000 example, £50 a month saves £11,534.10 of interest and cuts 1.83 years off the term. Small regular overpayments add up because of compounding.

Can my lender charge me for overpaying?

Often, yes, above a limit. Many fixed deals allow up to 10% of the balance a year fee-free, then charge an early repayment charge of roughly 1–5% on the excess. Check your mortgage terms before overpaying a lump sum.

Should I overpay or save the money instead?

It depends on the rates. Overpaying saves interest at your mortgage rate; saving earns interest at your savings rate. If your savings rate is lower than your mortgage rate, overpaying usually wins — but keep an emergency fund and clear higher-interest debt first.

Does overpaying reduce my monthly payment or shorten the term?

It depends on the lender. Some cut your monthly payment, others shorten the term. Shortening the term saves far more interest, so ask your lender to keep the payment the same and reduce the term.

Is it better to overpay early in the mortgage?

Yes. The balance is largest at the start, so money off the capital early saves interest for the longest. A lump sum in year 2 is worth more than the same lump sum in year 15.

Mortgage Overpayment Calculator UK

TL;DR: Overpaying by £200 a month on a £200,000 mortgage at an example rate of 4.5% over 25 years saves £36,280.39 of interest and clears the mortgage 6.08 years early (18.92 years instead of 25). Even £50 a month saves £11,534.10 and 1.83 years. Check your lender allows overpayments without an early repayment charge first.

Loan amount (£) Interest rate (% per year) — example rate, enter your lender’s rate Original term (years) Monthly overpayment (£)

Model: the overpayment is paid every month on top of the normal payment, at one fixed example rate for the whole term. Real rates change, and some lenders cap fee-free overpayments (often 10% of the balance a year). This calculator is not mortgage advice.

Why overpaying works so well

Every pound you overpay goes straight off the capital you owe, so next month’s interest is charged on a smaller balance. That smaller balance means more of your normal payment goes to capital too, and the effect compounds month after month. The earlier you start, the bigger the saving, because the balance is largest at the start. This is also why a one-off lump sum early in the mortgage can be worth more than the same amount paid years later. The calculator simulates the mortgage month by month, so the saving it shows is the real compounding effect, not a rough estimate.

There is a trade-off to weigh honestly. Money overpaid into a mortgage is hard to get back — it is not a savings account. If you have expensive debts, such as a credit card charging far more than your mortgage rate, clearing those first usually saves more. And if you have no emergency savings, keeping some cash accessible matters more than shaving months off a mortgage. Overpaying is usually best once high-cost debt is gone and you have a small cash buffer.

Worked example: £200,000 at example rate 4.5%, 25 years

Monthly overpayment	Paid off in	Total interest	Interest saved
£0	25.00 years	£133,499.49	—
£50	23.17 years	£121,965.39	£11,534.10
£100	21.50 years	£112,357.69	£21,141.80
£200	18.92 years	£97,219.09	£36,280.39
£300	16.92 years	£85,791.55	£47,707.94

Notice how the saving grows faster than the overpayment: doubling the overpayment from £100 to £200 saves an extra £15,138.59 of interest, not just twice the £21,141.80. That is the compounding effect at work. The table uses the example rate of 4.5% throughout; your own rate will change the exact numbers, but the pattern holds at any rate.

Before you overpay, check three things

Early repayment charges. Many fixed-rate deals let you overpay up to 10% of the outstanding balance each year without a charge, but anything above that can trigger a fee, often 1–5% of the amount overpaid. Ask your lender for your exact allowance before paying a lump sum.
How the lender applies it. Some lenders cut your monthly payment after an overpayment; others keep the payment the same and shorten the term. Keeping the payment the same saves far more interest, so ask for the term to be shortened if you have the choice.
Your other debts and savings. As above, clear high-interest debt first and keep an emergency fund. Overpaying a mortgage at an example rate of 4.5% while a credit card charges 25% is a bad trade.

Overpay monthly or pay a lump sum?

Both work, and both use the same maths: money off the capital early saves the most. A regular monthly overpayment is easier to budget and keeps the benefit going every month. A lump sum — a bonus, an inheritance, a tax refund — is worth doing as soon as it arrives rather than waiting, because every month it sits in a low-interest savings account instead of cutting your mortgage balance is a month of lost saving. Some people do both: a modest monthly overpayment plus a lump sum when one arrives. Whatever you choose, keep the overpayment affordable. A mortgage is a 25-year commitment; an overpayment you have to stop after three months helps less than a smaller one you keep up for years.

Overpaying vs investing the money instead

Overpaying a mortgage is, in effect, a guaranteed return equal to your mortgage rate: every pound overpaid saves interest at that rate for the rest of the term. If your mortgage rate is 4.5% and a savings account pays 4%, overpaying wins on the numbers alone. If a savings account or an investment pays more than your mortgage rate, the maths can favour saving or investing — but only if the higher return is real and not just hoped for. Savings rates are guaranteed up to the deposit protection limit; investment returns are not, and they can fall as well as rise. There is also a tax angle: interest on savings above your Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate) is taxed, while the interest you save by overpaying is never taxed. That makes overpaying relatively more attractive for higher-rate taxpayers and for anyone whose savings already exceed the allowance. A common middle path is to split the money: overpay some and save some, so you get the guaranteed saving and keep cash accessible. Remember that money overpaid into a mortgage is hard to get back, while money in a savings account or an ISA is there when you need it. If you might need the cash in the next year or two — for a car, a move, or a career break — save it instead of overpaying.

What if interest rates change?

The saving shown by this calculator assumes one fixed rate for the whole term. In real life your rate will change, and the value of overpaying changes with it. When rates are high, overpaying saves more, because each pound off the balance avoids interest at that higher rate. When rates are low, the saving is smaller. That cuts both ways: overpaying while your rate is high is the most valuable time to do it, and overpaying while you are on a cheap fixed rate saves less. The other thing that changes is your payment itself. If your rate rises at the end of a fixed deal, your normal monthly payment rises too, which can make an overpayment harder to afford. That is a reason to start overpaying while the rate is low and the payment is comfortable, rather than waiting for the rate to rise and then finding the budget is gone. If your lender lets you, set the overpayment up as a standing order so it happens automatically every month — willpower is a poor budgeting tool, and an automatic payment keeps the habit going through the months when you would otherwise skip it.

One more practical point: tell your lender what you are doing. Some lenders apply overpayments automatically against the capital, which is what you want. Others may hold the money as a credit against future payments unless you ask them to reduce the balance, which saves far less interest. A short call or a note on your online account is enough to confirm it, and it is worth doing before the first overpayment goes in. If your mortgage is with a lender that offers an offset facility, money held in the linked savings account reduces the interest charged without being paid off the loan at all, which keeps the cash accessible while still cutting the interest — an offset mortgage suits people who want the saving and the flexibility together.

Sources: FCA mortgage rules (MCOB 11) on overpayments and early repayment charges; GOV.UK “Mortgages” guidance. Rates are user-entered examples, not market rates. Checked 13 November 2026.

Important: Everything on this site is general information for planning purposes only. It is not professional financial advice, not tax advice, and not a substitute for advice from a qualified adviser. Rates and thresholds are for the UK tax year 2026/27 (6 April 2026 – 5 April 2027) unless stated otherwise, and can change. Figures are estimates — your actual pay depends on your tax code, pension scheme, student loan plan and other deductions. Check the current figures on GOV.UK or speak to a qualified adviser before acting.