How much will I save by overpaying my mortgage?

On a £200,000 repayment mortgage over 25 years at 4.5%, overpaying £100 a month saves £21,142 of interest and clears it 3½ years early. £200 a month saves £36,280 and 6 years; £500 a month saves £63,887 and 11 years.

How much can I overpay without a penalty?

During a fixed-rate or tracker deal, most lenders let you overpay up to 10% of the balance each year without an early repayment charge. Santander, for example, allows 10% each calendar year and doesn't let unused allowance carry over. Your mortgage offer sets out your own allowance and charges.

Is it better to overpay monthly or as a lump sum?

The sooner the money goes in, the more it saves. £5,000 paid at the start of our example saves £9,956 of interest; the same £5,000 paid five years later saves £7,052. Regular monthly overpayments are easier for most budgets, and you can add a lump sum when you have one.

Should I shorten my term or lower my monthly payment?

Shortening the term saves far more interest. A £5,000 overpayment that shortens the term saves £9,956 in our example; if it lowers the payment instead, by about £28 a month, it saves about £3,300. Some lenders lower the payment automatically, so tell them which you want.

Is it better to overpay my mortgage or save?

Compare your mortgage rate with what your savings earn after tax. Overpaying a 4.5% mortgage is like earning a guaranteed, tax-free 4.5%. For a higher-rate taxpayer who has used their £500 Personal Savings Allowance, a taxed savings account would need to pay 7.5% to match. Keep an emergency fund first, and clear more expensive debts before overpaying.

Does overpaying help when I remortgage?

Usually. A lower balance means a lower loan-to-value, and lenders price their deals in loan-to-value bands, so crossing into a lower band can get you a better rate at your next remortgage.

UK Mortgage Overpayments: How Much Interest You Save

Every pound you overpay comes straight off the balance your interest is charged on, so it saves interest every month for the rest of the mortgage. Over 25 years that adds up to far more than the overpayment itself. Here's how much it saves, monthly or as a lump sum, how much you can overpay without a charge, and when saving the money instead makes more sense.

To see your own figures, open the mortgage calculator with this example filled in, then change the balance, rate and overpayment.

How much overpaying every month saves

The example: a £200,000 repayment mortgage with 25 years to run at 4.5%. The normal payment is £1,111.66 a month, and you'd pay £133,499 of interest in total.

Overpayment	Interest saved	Paid off sooner by	Mortgage-free in
£50 a month	£11,534	1 year 10 months	23 years 2 months
£100 a month	£21,142	3 years 6 months	21 years 6 months
£200 a month	£36,280	6 years 1 month	18 years 11 months
£300 a month	£47,708	8 years 1 month	16 years 11 months
£500 a month	£63,887	11 years	14 years

The figures assume the rate stays at 4.5% for the whole term. In reality it changes each time a deal ends, so treat them as a guide to the size of the saving.

How much a lump sum saves

One-off overpayment	Interest saved	Paid off sooner by
£5,000 at the start	£9,956	1 year 1 month
£5,000 after 5 years	£7,052	10 months
£10,000 at the start	£19,196	2 years 2 months
£20,000 at the start	£35,778	4 years 2 months

Starting early matters most

Interest is charged on the balance, and the balance is highest at the start. That's why £5,000 saves almost £10,000 if you pay it at the start, but about £7,000 five years later. The same goes for monthly overpayments. £200 a month from day one saves £36,280. Start it 10 years in, when £145,317 is left, and it saves £11,944 and 3 years.

Higher rates make overpaying worth more

Mortgage rate	Normal payment	Saved by overpaying £200 a month
4%	£1,055.67	£31,067 and 6 years
4.5%	£1,111.66	£36,280 and 6 years 1 month
5%	£1,169.18	£41,843 and 6 years 2 months
6%	£1,288.60	£54,078 and 6 years 4 months

All for £200,000 over 25 years.

Shorter term or lower payment?

After an overpayment, a lender can either keep your payment the same, so the mortgage ends sooner, or lower your monthly payment over the original term. Lenders handle this differently, and some lower the payment automatically. The difference is large: a £5,000 overpayment that shortens the term saves £9,956 of interest. If it lowers the payment instead, by about £28 a month to £1,083.87, it saves about £3,300. If you want the bigger saving, ask your lender to keep your payment the same.

How much can you overpay without a charge?

During a fixed-rate or tracker deal, most lenders allow overpayments of up to 10% of the balance a year without an early repayment charge (ERC). Santander, for example, allows 10% each calendar year, January to December, and unused allowance doesn't carry over. Other lenders count from the start of your deal or from your balance on a set date.
On a £200,000 balance, 10% is £20,000 a year, far more than £200 a month.
Above the allowance, the lender can charge an ERC, a percentage of the amount repaid, which can cancel out the interest you'd save. The early repayment section of your mortgage offer gives the exact figures.
Once your deal ends and you're on the lender's standard variable rate, there's usually no early repayment charge, but check before paying in a large sum.

Overpay or save?

An overpayment earns you your mortgage rate, guaranteed and tax-free. Savings interest can be taxed: the Personal Savings Allowance lets basic-rate taxpayers earn £1,000 of interest a year tax-free, higher-rate taxpayers £500 and additional-rate taxpayers nothing. Above it, to beat a 4.5% mortgage a taxed savings account would need to pay:

5.63% for a basic-rate taxpayer;
7.5% for a higher-rate taxpayer;
8.18% for an additional-rate taxpayer.

Interest in a cash ISA is tax-free, so you can compare its rate with your mortgage rate directly. Before overpaying, it usually makes sense to:

keep an emergency fund, because money paid into most mortgages can't be taken back out (offset and flexible mortgages are the exception);
clear more expensive debt first, such as credit cards, car finance and overdrafts;
make sure you get your full employer pension contribution, since employer contributions and tax relief usually beat mortgage interest.

How to overpay

Check your mortgage offer for your overpayment allowance and how it's counted.
Set up the overpayment with your lender, as a regular monthly amount or a one-off payment, online or by phone.
Ask them to keep your monthly payment the same, so the term shortens.
Keep track of what you've overpaid in each allowance year.

Run your own numbers in the mortgage calculator: choose United Kingdom and add a monthly or one-off overpayment. Coming to the end of a deal? The remortgage calculator compares a new deal with staying put.

Figures from our mortgage calculator, assuming the rate stays the same for the whole term and interest is charged monthly. Sources: Santander "Mortgage overpayments"; GOV.UK "Tax on savings interest". Illustrations, not financial advice: check your own mortgage offer before overpaying. Last reviewed October 2026.