Mortgage overpayment calculator

On £200,000 at 5% over 25 years, paying an extra £200 a month clears the mortgage 6 years and 2 months early and avoids £41,841 of interest. Your monthly payment does not change — the mortgage just ends sooner.

Repaying the mortgage with and without the overpayment
	As it stands	Overpaying
Monthly payment	£1,169.19	£1,369.19
Time to clear	25 years	18 years 10 months
Interest paid	£150,751.21	£108,910.06
Total repaid	£350,751.21	£308,910.06

Year	Interest	Capital repaid	Still owing
1	£9,850.59	£6,579.69	£193,420.31
2	£9,513.94	£6,916.34	£186,503.97
3	£9,160.08	£7,270.20	£179,233.77
4	£8,788.14	£7,642.14	£171,591.63
5	£8,397.15	£8,033.13	£163,558.50
6	£7,986.15	£8,444.13	£155,114.37
7	£7,554.15	£8,876.13	£146,238.24
8	£7,100.00	£9,330.28	£136,907.96
9	£6,622.65	£9,807.63	£127,100.33
10	£6,120.89	£10,309.39	£116,790.94
11	£5,593.44	£10,836.84	£105,954.10
12	£5,039.03	£11,391.25	£94,562.85
13	£4,456.22	£11,974.06	£82,588.79
14	£3,843.60	£12,586.68	£70,002.11
15	£3,199.65	£13,230.63	£56,771.48
16	£2,522.74	£13,907.54	£42,863.94
17	£1,811.20	£14,619.08	£28,244.86
18	£1,063.28	£15,367.00	£12,877.86
19	£287.16	£12,877.86	£0.00

How this is worked out

The contractual payment comes from the standard annuity formula — the amount that clears the balance in exactly the term, given the rate. From there the loan is simulated a month at a time rather than solved algebraically: interest is added to the balance, the payment is taken off, and the remainder carries to the next month, until nothing is left. The same loan is then run again with the overpayment included, and the two are compared. Simulating rather than solving matters because the outcome depends on rounding to the penny every month and on the final payment being whatever is left rather than a full one.

A £200,000 mortgage at 5% over 25 years, overpaying £200 a month

The annuity formula gives the contractual monthly payment for £200,000 over 300 months at 5%.
Run the loan month by month at that payment: interest on the balance, payment off, repeat. It clears on month 300.
Run it again paying the same amount plus £200. The balance falls faster, so it clears sooner.
The difference between the two is the term saved and the interest avoided.

The result: the term falls from 25 years to 18 years and 10 months, and the interest falls from £150,751 to £108,910 — a saving of £41,841.

These figures are computed by the same engine the calculator above uses, and a test recomputes them on every build. If the engine ever stopped agreeing with this example, the build would fail rather than the page quietly going stale.

Why there is nothing to cite here

Every other calculator on this site states the date its rates were checked against gov.uk, because it works from figures somebody else publishes. This one does not: there is no rate to look up, because every number comes from what you type. It cannot go out of date, and it has no external authority to lean on either — which is why it shows its working instead.

What catches people out

Overpaying does not reduce your monthly payment. It shortens the term. Your lender keeps taking the same amount each month, and the mortgage simply ends sooner — which is why the result here is measured in years and months saved rather than in a smaller bill.
Most lenders cap penalty-free overpayments at 10% of the outstanding balance a year while you are inside a fixed deal. Going over usually triggers an early repayment charge of 1–5% of the amount, which can wipe out the interest saved several times over. Check your mortgage offer before setting up a standing order.
An overpayment early in the term is worth far more than the same amount later. Interest is charged on what you still owe, so a pound paid in year two avoids twenty-three years of interest while the same pound in year twenty-two avoids three. The saving is not proportional to the amount.
Some lenders reduce the term automatically and some hold the payment and shorten it only on request; a few will treat an overpayment as an early payment of next month rather than a reduction of capital, which saves nothing at all. It is worth confirming which your lender does before assuming this arithmetic applies.
This assumes the interest rate stays the same for the whole term, which almost no UK mortgage does. Rates are fixed for two, three or five years and then move. Treat the total-interest figure as what would happen if today's rate ran to the end, not as a prediction.

Questions

Is it better to overpay the mortgage or put the money in savings?

That depends on the two rates and on things this page cannot see — whether you have an emergency fund, whether the savings interest is taxed, whether you might need the money back. Overpaying a mortgage is not reversible: once the capital is repaid you cannot draw it out again unless your lender offers a borrow-back facility.

What the arithmetic says is narrower and more useful: this page tells you exactly how much interest the overpayment avoids, and you can compare that with what the same money would earn elsewhere. The comparison is yours to make.

Why does a small monthly overpayment save so much?

Because it comes off the capital, and every future month's interest is charged on a smaller balance than it would otherwise have been. The saving compounds in exactly the way the debt does.

It also shortens the term, and the months removed are the ones at the end — by which point almost all of the payment is capital rather than interest. Removing them removes the tail of the loan.

Does this match what my lender will tell me?

Closely, but not to the penny. This charges interest once a month on the balance, which is the convention every quoted rate is based on. Most UK lenders calculate interest daily and charge it monthly, so the exact figures shift by a few pounds depending on the length of each month and the day your payment lands.

The term saved and the broad interest saving will match. Do not take the total to the penny to your lender.

Should I overpay or shorten the term formally?

Formally shortening the term achieves the same arithmetic but commits you to the higher payment. An overpayment by standing order leaves you free to stop. Lenders sometimes price the two differently, and a formal term reduction is a new contract.

The result is the same either way in this calculation; the difference is flexibility and commitment, which is a decision rather than a sum.

Debt payoff calculator