Mortgage Overpayment Calculator
- Our overpayment calculator shows how making extra monthly payments on your mortgage could reduce the time it takes to repay the loan.
- It estimates how much interest you might save by overpaying.
- This calculator is intended as a guide only; check with your lender first, as some may charge Early Repayment Charges for overpayments.
Want help understanding mortgage terms? Explore our glossary.
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Important information to note!
- Your property may be repossessed if you do not keep up repayments on your mortgage.
- Using our mortgage calculators or rate comparison tools will not affect your credit score.
- These tools are for guidance only and do not replace financial advice.
- Your actual mortgage offer may be different from these estimates. Lenders will look at your credit history, spending, and other factors before deciding.
- Always talk to a qualified mortgage adviser for advice that’s right for you and your needs.
- Mortgage products and rates can change at any time, for example if the Bank of England base rate changes or if the government updates policies.
- Our mortgage advice is fee-free. Third-party fees may apply during the home buying process.
Frequently Asked Questions
Making regular overpayments reduces your remaining balance more quickly, which lowers the monthly interest charged on your mortgage account. Over time, this can result in significant interest savings and help you pay off your mortgage sooner. Remember, these examples are provided for illustrative purposes only; actual results may vary depending on your mortgage terms. Always check for any overpayment restrictions or limits.
Advantages:
- Reduce your remaining balance more quickly, saving you money on interest.
- Shorten your mortgage term to become mortgage-free sooner.
- Improve your position when applying for a new mortgage deal.
Disadvantages:
- You might face overpayment restrictions, such as a maximum amount you can pay extra each year.
- Exceeding your allowance may trigger early repayment charges (ERCs).
- Using savings to cover overpayments may reduce your financial flexibility.
It's essential to review your mortgage documents or consult with your lender to determine any applicable limits or early repayment charges.
Most UK lenders permit overpayments but generally impose a maximum amount you can pay each year without penalty, commonly around 10% of your outstanding balance. Going beyond this may result in penalties. Knowing your lender's overpayment restrictions is essential before making extra payments.
Regular monthly overpayments reduce your remaining balance gradually, lowering the monthly interest charged and potentially shortening your mortgage term. One-off overpayments are lump sums applied to your mortgage account, which can also reduce your balance and interest faster. In both cases, staying within any maximum amount limits helps you avoid fees.
Monthly overpayments start reducing your interest straight away, while lump sums can be useful when you receive extra funds, like a bonus. Both have benefits, but always keep your payments within your lender's overpayment restrictions.
Both help save on interest. Overpaying means paying off your remaining balance more quickly, which reduces your monthly interest charges. Reducing your term generally requires higher monthly payments but can lead to greater interest savings over the life of the mortgage. What's best depends on your financial situation.
An overpayment is any amount paid above your regular monthly mortgage payment that is deposited into your mortgage account. Overpayments reduce your balance and the interest you pay; however, ensure you stay within any overpayment restrictions to avoid additional charges.
Most lenders apply overpayments to your mortgage within a few working days, though some do it the same day. If timing is important, please check with your provider.
Once credited, your lender recalculates your interest based on the new, lower remaining balance in your mortgage account. This adjustment reduces your monthly interest and can shorten your mortgage term.
If allowed, you can:
- Reduce your monthly payments, freeing up cash flow; or
- Keep payments the same and shorten your mortgage term to save more in interest.
Consider your financial goals and ensure you stay within your lender's overpayment restrictions.
Overpaying within limits usually shows good financial management and doesn't harm your credit score. However, overstretching your budget might affect your ability to meet other financial commitments.
Overpaying before your current deal ends lowers your remaining balance, which may help you qualify for better rates when you remortgage. On a standard variable rate, a smaller balance results in lower monthly interest. Check your lender's policies to avoid penalties as your deal term comes to an end.
Important: Always review your mortgage agreement or speak with your lender about your overpayment restrictions, maximum amount allowed, and any early repayment charges. For tailored advice, consult a qualified mortgage adviser.