UK Mortgage Overpayment Calculator
Calculate how much interest you can save and how many years you can shave off your UK mortgage through monthly overpayments or lump-sum capital reductions, accounting for the common 10% annual ERC allowance.
Amortization Comparison Summary
Capital Balance Trajectory
Comparing debt elimination curves over time
Year-by-Year Amortization Ledger
Forecasted capital balance erosion under your overpayment strategy
| Year | Starting Balance | Scheduled Payments | Overpayment Capital | Interest Accrued | Balance at Year-End |
|---|
The Mathematics of Mortgage Overpayment
UK lenders charge interest daily or monthly on the outstanding balance. Adding an overpayment (ΔO) cuts the balance that interest is charged on straight away, so every later payment clears more capital and the loan ends sooner.
Where Pn is the balance after month n, r is the monthly interest rate (annual rate / 12), M is the contractual monthly repayment and ΔO is your monthly overpayment. The contractual payment is M = P × [ r(1+r)n ] / [ (1+r)n − 1 ].
Strategic Matrix: Overpay vs S&S ISA
Weighing a guaranteed reduction in interest against the uncertain return from investing the same money.
Mortgage Overpayment (Guaranteed Return)
Earns a guaranteed return equal to your mortgage rate (4.75% tax-free) with no investment risk, and lowers your debt.
Stocks & Shares ISA (Market Return)
Global shares have returned roughly 7–8% a year before inflation over long periods, tax-free inside an ISA — but with volatility, drawdowns and no guarantee.
How this calculator works
The contractual monthly payment is standard amortisation on the outstanding balance over the remaining term. A lump sum is taken off the opening balance before the first month. Each month interest is balance × monthly rate, and the rest of the payment (contractual + overpayment) reduces the balance. We count the months until the balance reaches zero and compare the interest with and without your overpayments. Overpayments here shorten the term; some lenders can instead reduce your monthly payment.
By Suhaib Hassan · Formula verified 20 Sep 2026 · How CalculatePilot verifies formulas
A worked sterling example
Outstanding balance £200,000 · rate 4.5% · 20 years remaining. With no overpayment the scheduled payment is about £1,265.30 and interest totals about £103,672 over 240 months. Adding £200 a month (≈ £1,465.30 in total) clears the loan in 192 months — 4 years sooner — with about £80,735 of interest, saving roughly £22,936.
What this figure does not include
- Early repayment charges. Many fixed deals cap penalty-free overpayments at around 10% of the balance a year. The guardrail above checks year-one overpayments against that typical cap — your offer document has the real limit.
- Offset accounts. Savings held against the loan reduce interest in a different way.
- Rate changes. The rate is held constant. For a remortgage, use the refinance breakeven calculator.
- Stamp Duty or a new purchase. Use the UK Stamp Duty calculator or the UK repayment calculator.
MoneyHelper explains overpayments and ERC limits in plain language — read it before you instruct your lender.
Frequently asked questions
Do UK lenders allow overpayments?
Most repayment mortgages allow them, often up to a yearly percentage of the balance without an early repayment charge. Check your offer document for the cap and whether extra payments cut the term or the monthly payment.
Does this include early repayment charges?
No. Interest saved is amortisation only. The 10% guardrail is a typical penalty-free allowance, not your lender's ERC table.
Should I overpay or invest in an ISA?
Overpaying gives a guaranteed, tax-free return equal to your mortgage rate. A stocks and shares ISA may earn more over the long run but can fall in value. Many people keep an emergency fund first, then split spare cash based on their mortgage rate and appetite for risk.
Should I overpay or remortgage?
Overpaying keeps the current rate and shortens the term. Remortgaging changes the rate and usually adds fees. Use this page for extra payments and the refinance breakeven calculator if the question is a new rate.
Is this the same as the UK repayment vs interest-only calculator?
No. That page compares two products for a purchase. This page takes an existing repayment mortgage and measures the effect of overpaying.
Are these figures a lender illustration?
No. Confirm with your lender or a regulated adviser, especially around ERC limits.