Mortgage Overpayment Calculator in the UK
Overpaying on your mortgage means paying extra on top of your regular monthly payments, helping you save on interest and potentially pay off your mortgage sooner. Even small overpayments can reduce the amount of interest you pay and shorten your mortgage term over time. Our calculator helps you see the impact of different overpayment options on your mortgage.
How Does Mortgage Overpayment Calculator Works?
Our UK Mortgage Overpayment Calculator is designed to help you understand the impact of making extra payments on your mortgage.
By entering a few key details, you can see how overpayments can affect the total interest you pay and how quickly you can pay off your mortgage.
To use the calculator, enter your Principal (loan amount), Interest Rate, Total Months (the length of your mortgage term), and any Monthly or Lumpsum Overpayment amount you plan to add to your regular payments.
Once you input these values, the calculator will show:
- Monthly Payment With and Without Overpayment: This gives a side-by-side view of what you’ll pay monthly based on your regular mortgage terms versus your adjusted amount with overpayment.
- Total Interest After Overpayment: This is the total interest cost if you maintain the specified overpayment schedule. By comparing this with the original interest amount, you can see how much you save overall.
- New Mortgage Term: This reflects the revised term length with overpayments. It shows how many months or years earlier you could finish paying off your mortgage.
These results help you understand the financial benefits of overpayments, including both interest savings and the potential to become mortgage-free sooner.
Types of Overpayment
There are generally two ways to make overpayments:
Lump-Sum Overpayment
This is a one-time extra payment applied to your mortgage balance. A larger lump sum can significantly reduce your outstanding balance, leading to interest savings and potentially shortening your term. Be sure to check if your lender allows this type without penalty.Monthly Overpayment
This involves paying an additional fixed amount each month on top of your regular mortgage payment. This approach gradually reduces your principal, leading to lower interest charges over time and potentially reducing your term.
Does Mortgage Overpayment Make a Difference?
When you make overpayments, the extra amount goes directly toward reducing your mortgage balance (principal), which lowers the amount on which interest is calculated. Over time, as your balance decreases, you’ll pay less in interest, creating a compounding effect on your savings.
Here’s how:
Reduced Interest Payments
Since interest is calculated on the remaining balance, reducing this balance means less interest accrues each month. Over the life of the loan, this can add up to substantial savings.
Shortened Loan Term
By lowering the balance faster, overpayments can help you pay off your mortgage ahead of schedule. Even a small regular overpayment can shave off several months—or even years—from a long-term mortgage.
Flexible Payment Options
Some lenders offer flexibility in how overpayments are applied. For example, you may have the option to reduce your future monthly payments after making a significant overpayment.
However, if your goal is to pay off the mortgage early, choosing to shorten the term with overpayments would be more beneficial.
