About this calculator
A repayment mortgage is mostly interest at the start: on a £200,000 loan at 4.50% over 25 years, £750 of the first £1,111.66 payment is interest. An overpayment lands entirely on the capital, so every future month's interest is calculated on a smaller balance — the saving compounds for the whole remaining term. That is why £200 a month extra on that loan saves £36,280 of interest and clears the debt 73 months (just over 6 years) early.
The catch on fixed deals is the early repayment charge. Most fixed-rate mortgages let you overpay up to 10% of the outstanding balance each year without penalty; go beyond it and an ERC — typically 1–5% — can apply to the excess, sometimes to the whole overpayment, depending on the lender's wording. But an ERC can only bite while the fix is running: this calculator checks the years left on your current fix against that allowance (measured on the balance at the start of each year, the most common basis) and flags the first year you would breach it, so you can size your overpayments to stay charge-free. Tracker and standard-variable-rate deals usually have no ERC at all.
How to use it
- Enter your balance, rate and the term remaining — from your latest mortgage statement.
- Add a monthly overpayment, a one-off lump sum, or both; the lump sum is applied immediately.
- Tell it how long your current fix has left to run (0 if there is no fix — ERCs do not apply), leave the ERC-free allowance at 10% unless your offer letter says otherwise, and set the ERC to your deal's rate if you know it.
- Read the interest saved and the time cut; then check the note — it tells you whether any year of the fix breaches the allowance and what the charge could be.
- The year-by-year table shows the overpayment plan: capital paid, interest paid and the balance falling.
The formula
Because interest is charged on the outstanding balance, an overpayment in month 1 saves interest in every one of the remaining months, which is why early, regular overpayments beat the same total paid later. The contractual payment M = P × r(1 + r)^n ÷ ((1 + r)^n − 1) is never recalculated in this simulation — lenders keep the payment fixed and shorten the term, which is the most valuable outcome; if your lender instead cuts the monthly payment, the interest saving is smaller.
Worked example
£200,000 at 4.50% with 25 years left costs £133,499 of interest and £1,111.66 a month. Overpay £200 a month and the loan clears in 227 months instead of 300 — 73 months early — with total interest of £97,219: a saving of £36,280. Each year you overpay £2,400, well inside the 10% allowance (£20,000 on the opening balance), so no ERC arises on a typical fixed deal. Add a £10,000 lump sum today as well and the saving rises to £48,847, with the loan gone in 210 months.
Sources: Standard amortization mathematics; the 10%-per-year ERC-free allowance and 1–5% early repayment charges are the market-typical terms on UK fixed-rate deals (per lender offer documents) and are adjustable inputs. Last updated: October 2026.
Frequently asked questions
How much can I overpay without an early repayment charge?
On most fixed-rate deals, up to 10% of the outstanding balance per year — but the basis varies: some lenders measure 10% of the balance at the start of the year, others 10% of the original loan, and a few allow 20% or a fixed cash amount. Your mortgage offer and annual statement state yours. Tracker and SVR deals typically allow unlimited overpayments with no ERC.
Is it better to overpay monthly or save up a lump sum?
Monthly, almost always: a lump sum paid a year from now has missed a year of interest savings on that money. £200 a month from today beats £2,400 paid each December. The exception is flexibility — money overpaid is usually locked into the property, so keep an emergency fund outside the mortgage first.
Should my overpayment shorten the term or cut the payment?
Shortening the term saves far more interest, because the higher payment keeps attacking the capital. Cutting the payment keeps the original end date and spreads the same debt thinner. Most lenders default to term-shortening but will switch on request — this calculator assumes the term shortens.
Overpay the mortgage or invest the money?
Overpaying earns a guaranteed, tax-free return equal to your mortgage rate (4.50% in the example) with zero risk. Investing can beat that on average but with volatility and tax. A common split: build a cash buffer, then overpay while rates are high, especially if the alternative is a savings account paying less than the mortgage rate after tax.
What formula does this uk mortgage overpayment calculator use?
Each month: interest = balance × (annual rate ÷ 12); capital repaid = (contractual payment + overpayment) − interest; balance falls by the capital repaid. The simulation runs twice — with and without overpayments — and the saving is the difference in total interest; the term cut is the difference in months to a zero balance. Because interest is charged on the outstanding balance, an overpayment in month 1 saves interest in every one of the remaining months, which is why early, regular overpayments beat the same total paid later. The contractual payment M = P × r(1 + r)^n ÷ ((1 + r)^n − 1) is never recalculated in this simulation — lenders keep the payment fixed and shorten the term, which is the most valuable outcome; if your lender instead cuts the monthly payment, the interest saving is smaller. The worked example on this page applies the formula step by step with real numbers, so you can verify the result by hand.