Mortgage overpayment calculator
Enter what you still owe, your interest rate and the time left on your mortgage. Add a regular overpayment, a lump sum or both, and the calculator compares the interest you would pay with and without them. The sum is shown step by step under the result.
What the calculator assumes
- You have a repayment mortgage, so each monthly payment covers the interest and pays off part of what you owe.
- The interest rate stays the same for the whole of the remaining term.
- Interest is charged once a month on the balance at the start of that month. Many lenders charge interest daily, so their figures can be a little different.
- Overpayments are made at the end of each month, after the normal payment. A lump sum is paid today, before the next payment.
- No fees or early repayment charges are included.
How overpaying saves interest
A repayment mortgage has a fixed monthly payment that clears the loan by the end of the term. Each month the lender first takes the interest on what you owe. The rest of the payment reduces the balance.
At the start the balance is at its highest, so most of each payment goes on interest and only a small part pays off the loan. As the balance falls, the interest falls with it, and more of each payment goes on the loan itself. Lenders call this amortisation.
An overpayment goes straight to the balance. A smaller balance means less interest next month and in every month after it, so an early overpayment saves more interest than the same amount paid near the end of the term. The year by year table under the result shows how the balance falls in each case.
Shorten the term or lower the payment
When you overpay, a lender usually does one of two things with the money. The calculator lets you see both.
If the overpayments shorten the term, your monthly payment stays the same. Because the balance is lower, more of each payment goes on the loan, and the mortgage ends sooner. Fewer months of interest usually means a larger saving in total.
If the overpayments lower the payment, the lender works out a new monthly payment over the time that is left. The mortgage ends at about the same date, and each normal payment is smaller. You still pay less interest than with no overpayments, because the balance is lower at every point.
Some lenders choose one of these for you, and others ask. Your lender can tell you which it uses.
Overpayment limits and charges
Many fixed rate and tracker deals let you overpay a set amount each year without a charge. If you pay more than that during the deal, the lender can take an early repayment charge on the extra.
The limit, the charge and the date the deal ends are in your mortgage offer. If you cannot find them, ask your lender before you overpay. MoneyHelper, the free guidance service backed by the government, has more about overpaying and early repayment charges.
What the calculator leaves out
The calculator works only for repayment mortgages. With an interest only mortgage, the monthly payment covers the interest and none of the loan, so the sums are different.
An offset mortgage takes your savings away from the balance before it charges interest. The effect is similar to an overpayment, but you can take the money back. The calculator does not model this.
Most fixed deals end before the mortgage does, and the rate then changes. The calculator keeps one rate for the whole term, so its figures show the effect of overpaying at today's rate only.
Spotted a mistake?
Email [email protected]. Tell us what you entered and what you expected to see. Fixed errors are listed on the corrections page.