What next?
Overpaying is one of three levers. These show the other two, and whether the money is better used elsewhere.
External links are marked and open in a new tab. Check your own lender’s overpayment limits and early-repayment charges before committing.
What your result means
Interest saved is the difference between the interest you would pay running the mortgage to term at the contractual payment, and the interest you pay with the overpayment applied. It is not a return on an investment — it is a cost avoided, and unlike a savings return it is certain and untaxed. Time cut off the mortgage assumes your lender shortens the term rather than reducing the payment, which is the default for most but not all lenders and is the assumption that makes the two figures consistent. Contractual payment is what the balance, rate and remaining term imply — if it differs from what you actually pay, one of your three inputs is not what you think it is.
Why this one is different
It answers the two questions people actually have — how much interest a regular overpayment saves, and how many years it removes from the term — and handles a one-off lump sum alongside the monthly amount. The calculation round-trips through the URL, so it can be sent to whoever else is on the mortgage.
The same £200 saves four times as much in year two as in year twenty
Interest is charged on the balance, so an overpayment saves you every future month of interest that pound would have attracted. Early in a mortgage that is twenty-odd years of compounding avoided; in the final year it is a few months. The saving is not proportional to the size of the overpayment alone — it is proportional to how long it sits in the loan.
This is also why the choice between overpaying and saving is not simply "is my mortgage rate higher than my savings rate". It usually is, and the saving is untaxed where savings interest may not be — but the money is gone until you remortgage or sell. Keep the emergency fund first, then overpay.
How it works
The calculator runs your mortgage twice. First at the contractual payment implied by the balance, rate and remaining term, giving the interest you would pay by running it to the end. Then again with the lump sum taken off the balance today and the overpayment added to every monthly payment, month by month, until the balance reaches zero. The difference between the two interest totals is the saving, and the difference between the two term lengths is the time cut.
How to use this calculator
- Enter the outstanding balance — the amount owed today, not the original loan.
- Enter the interest rate and the remaining term in years. Check the contractual payment shown matches your statement; if it does not, one of these is wrong.
- Enter the monthly overpayment you are considering, and a lump sum if you have one to put in now. Both take a cash amount or a percentage — the overpayment as a share of your normal payment, the lump as a share of the balance, which is how lenders express their annual overpayment cap (commonly 10%).
- Read the interest saved and the time cut. Then check your lender’s annual overpayment limit and any early repayment charge before you commit.
- Comparing this against investing the money instead? Try the compound interest calculator at the same monthly amount.
Formula
P = the contractual monthly payment, n = months remaining, B = outstanding balance. The second term is run month by month rather than in closed form, because the number of months is itself the unknown.
Example calculation
A £220,000 balance at 4.5% with 22 years left, overpaying £200 a month:
Interest without overpaying = £126,962
Interest with overpaying = £98,416
Interest saved = £28,546
Mortgage clears in 17 years 7 months — 4 years 5 months early
The overpayments themselves total £42,200 over those 17 years, so £28,546 of interest avoided is a substantial return on money that would otherwise have sat in a savings account being taxed.
Frequently asked questions
Should I shorten the term or reduce the payment?＋
Shortening the term is what saves the interest, and it is what this calculator assumes. If the lender instead reduces your monthly payment and leaves the term alone, you free up cash flow but save far less — the balance still runs the full remaining term. Most lenders default to keeping the payment and shortening the term for ad-hoc overpayments, but it is worth confirming in writing.
What is an early repayment charge?＋
A fee, typically 1% to 5% of the amount repaid, charged for overpaying beyond an allowance during a fixed or discounted deal. Most deals allow 10% of the balance a year without charge. This calculator does not model the charge, so if you are planning to exceed the allowance, subtract it from the saving before deciding.
Is overpaying better than saving or investing?＋
It depends on the rates and on tax. Overpaying earns you a guaranteed, untaxed return equal to your mortgage rate. A savings account has to beat that rate after tax to win, and an investment has to beat it after tax with no guarantee. What overpaying cannot do is give the money back — it is locked in the property until you remortgage or sell, which is why an accessible emergency fund comes first.
Does a lump sum work better than monthly overpayments?＋
Pound for pound, earlier is better, so a lump sum today beats the same amount spread over a year. But the comparison people actually face is a lump sum now against monthly amounts you can sustain, and the monthly habit usually wins on total because it keeps going. Enter both fields together to see the combined effect.
Why does the calculator show a payment different from mine?＋
It derives the payment from the balance, rate and term you entered, so a mismatch means one of those three is off — most often the remaining term, which people quote as the original term rather than what is left, or the rate, which changes when a fixed deal ends. Correct the input until the payment matches your statement, then the saving will be right.
What happens when my fixed rate ends?＋
The calculator holds one rate for the whole remaining term, which no real mortgage does. Treat the result as the saving under today’s rate: if you remortgage onto a higher rate, overpaying saves more than shown, and onto a lower rate, less. Re-run it each time your rate changes.
Related calculators
Assumptions & limitations
Every figure here comes from a simplified model. Keep these limits in mind when reading your result:
- One interest rate for the whole remaining term. Real mortgages move onto a new rate when the fixed or discounted period ends, and the saving moves with it.
- Interest is charged monthly on the outstanding balance. Lenders that calculate daily will give a marginally different figure; annual-interest lenders, now rare, a larger difference.
- Overpayments shorten the term rather than reducing the monthly payment. If your lender does the opposite, the interest saved is much smaller.
- Early repayment charges, overpayment allowances and any lender administration fee are not modelled. Check the annual allowance on your deal — typically 10% of the balance — before overpaying.
- A lump sum is applied immediately, before the next month’s interest. Monthly overpayments are applied with each payment, from month one.
- No account is taken of offset arrangements, interest-only elements, or a second charge on the property.