How Much Can I Save by Overpaying My Mortgage?

Overpaying your mortgage can save thousands in interest and cut years off your term. For example, overpaying £200/month on a £200,000 mortgage at 5% over 25 years saves approximately £35,000 in interest and pays off the mortgage 7 years early. Most lenders allow 10% overpayment per year without penalty. Use our calculator to see your specific savings based on your mortgage details.

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How much can I overpay on my mortgage?

Most lenders allow overpayments of up to 10% of your outstanding balance per year without penalty. Some allow more, and tracker/variable rate mortgages often have no limits. Check your mortgage terms - exceeding the limit triggers early repayment charges.

Is it worth overpaying my mortgage?

Usually yes, if you have spare cash and no higher-interest debts. Every pound overpaid saves interest over the remaining term. However, consider: emergency fund first, paying off higher-rate debts, and whether your savings could earn more than your mortgage rate.

Should I reduce term or monthly payments when overpaying?

For maximum savings, keep payments the same and reduce the term - you'll pay less interest overall. Reducing payments gives flexibility but saves less. Some people prefer flexibility in case circumstances change.

Can I get overpayments back?

Some mortgages have a 'borrow back' or 'reserve' facility letting you reclaim overpayments. Most don't - once paid, the money reduces your balance permanently. Check your mortgage terms if flexibility is important.

What's better - lump sum or monthly overpayments?

Mathematically, a lump sum paid earlier saves more interest (your balance reduces immediately). But regular monthly overpayments are easier to budget and build the habit. Both methods work - choose what suits your finances.

Do overpayments reduce my monthly payment?

Not automatically. Your contractual payment stays the same, but you pay off the balance faster. Some lenders let you 'recalculate' to reduce payments after significant overpayments. Ask your lender about your options.

Quick Answer

How Much Will Overpaying My Mortgage Save?

Last reviewed: December 2025

Reviewed by Jay Sabine – CeMAP Qualified – 29 years experience

Overpaying saves significant interest and reduces your term. £100-200/month can save tens of thousands over your mortgage lifetime.

Mortgage overpayments reduce your outstanding balance, meaning you pay less interest over the life of the loan. The earlier you overpay, the more you save - interest is calculated on the remaining balance. Most lenders allow overpayments of up to 10% of your balance per year without early repayment charges. Exceeding this limit may trigger ERCs, typically 1-5% of the excess. Before overpaying, ensure you have an emergency fund, no higher-interest debts, and check whether your savings rate exceeds your mortgage rate. Overpayments can reduce your term (finish early) or reduce monthly payments (more flexibility) - reducing the term saves more interest overall.

Your home may be repossessed if you do not keep up repayments on your mortgage. Check overpayment limits before making additional payments.

Key Points

1Reduces interest paid over mortgage lifetime
2Can cut years off your mortgage term
3Most lenders allow 10% overpayment annually
4Earlier overpayments save more interest
5Check limits to avoid ERC penalties
6Consider emergency fund first

Eligibility Criteria

Most mortgages allow some overpayment
Check your mortgage terms for limits
Fixed rates often have 10% annual cap
Trackers may have unlimited overpayment
Some offset mortgages work differently

Typical Timeframe

Overpayments take effect immediately - your balance reduces and subsequent interest is calculated on the lower amount. You'll see the impact on your annual mortgage statement showing reduced balance and projected end date.

Next Steps

1Check your mortgage overpayment limit
2Use the calculator to see potential savings
3Set up a standing order for regular overpayments
4Review your emergency fund first
5Consider whether to reduce term or payments

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Monthly Overpay	Interest Saved*	Time Saved
£100/month	~£18,000	~4 years
£200/month	~£32,000	~7 years
£300/month	~£42,000	~9 years
£500/month	~£55,000	~12 years

How Much Will Overpaying My Mortgage Save?

Key Points

Eligibility Criteria

Typical Timeframe

Next Steps

Related Questions

Mortgage Overpayment Calculator

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Before You Overpay

Clear High-Interest Debt First

Build Emergency Fund

Check Your Limits

Compare Savings Rates

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