Question 1

Is it worth overpaying my mortgage?

Accepted Answer

Usually yes, but it depends on your situation. Every extra pound you pay goes straight off the amount you owe, saving you years of interest. For example, overpaying £200/month on a typical £250,000 mortgage could save you over £50,000 and clear your mortgage 5+ years early. However, make sure you have an emergency fund first (3-6 months of expenses) and check your mortgage allows overpayments without penalties.

Question 2

How much can I overpay without penalties?

Accepted Answer

Most mortgages let you overpay up to 10% of your outstanding balance per year without charges. So if you owe £200,000, you could overpay up to £20,000 per year (about £1,667/month). Check your mortgage documents or ask your lender – the exact limit varies. Some flexible mortgages have no limits at all.

Question 3

Should I reduce my monthly payment or shorten the term when I overpay?

Accepted Answer

Most people choose to shorten the term, which saves far more in interest. Reducing your monthly payment makes your budget easier now but costs more overall. The best strategy: keep the monthly payment the same but shorten the term – this maximizes your savings. You can always reduce payments later if needed.

Question 4

Should I overpay my mortgage or save the money instead?

Accepted Answer

It depends on your mortgage rate and what you could earn on savings. If your mortgage charges 5% interest and your savings account pays 3%, you're better off overpaying the mortgage (you 'earn' 5% by avoiding interest vs 3% from saving). However, keep an emergency fund in savings first – you can't easily get money back out of your mortgage if you need it urgently.

Question 5

What's an offset mortgage and should I get one?

Accepted Answer

An offset mortgage links your savings account to your mortgage. Your savings reduce the balance you pay interest on, without you actually spending the money. For example, if you have £20,000 in savings and owe £200,000, you only pay interest on £180,000. It's flexible because you keep access to your savings, but offset mortgages often have slightly higher rates. They're best if you have a large savings pot and want flexibility.

Question 6

What happens to my overpayments if I remortgage?

Accepted Answer

Your overpayments have already reduced what you owe, so when you remortgage, you borrow less (or have more equity). The savings from overpaying are 'locked in'. When switching mortgages, your new lender sees the lower balance, so your new monthly payments will be smaller or your term shorter. You don't lose any benefit from overpaying.

Question 7

Can I stop overpaying if my circumstances change?

Accepted Answer

Yes, absolutely. Overpayments are voluntary – you're never committed to continue. If money gets tight or priorities change, just stop the overpayments and revert to your standard monthly payment. Your past overpayments have already reduced your balance permanently, so you keep all those savings. This is why keeping an emergency fund is so important before you start overpaying.

Question 8

When's the best time to make a lump sum overpayment?

Accepted Answer

As early as possible. Mortgage interest is calculated daily on your outstanding balance, so the sooner you reduce it, the more interest you save. If you get a bonus or inheritance, paying it off the mortgage immediately starts saving interest from day one. Even paying in January vs December of the same year saves you money.

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Frequently Asked Questions

Is it worth overpaying my mortgage?

How much can I overpay without penalties?

Should I reduce my monthly payment or shorten the term when I overpay?

Should I overpay my mortgage or save the money instead?

What's an offset mortgage and should I get one?

What happens to my overpayments if I remortgage?

Can I stop overpaying if my circumstances change?

When's the best time to make a lump sum overpayment?

See How Much You Could Save

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We use cookies

Before You Begin

Mortgage Settings

Quick Scenario Templates

Mortgage Summary

Mortgage Balance Over Time

Save to Your Financial Plan

Assumptions & Notes

View calculation assumptions

What's Next?

Pension vs Mortgage Calculator

Investment vs Mortgage Calculator

Pension NI 2029 Calculator

Pension NI Changes 2029

Overpay or Invest Guide

About the author

Is it worth overpaying my mortgage?

Is it worth overpaying my mortgage?

How much can I overpay without penalties?

How much can I overpay without penalties?

Should I reduce my monthly payment or shorten the term when I overpay?

Should I reduce my monthly payment or shorten the term when I overpay?

Should I overpay my mortgage or save the money instead?

Should I overpay my mortgage or save the money instead?

What's an offset mortgage and should I get one?

What's an offset mortgage and should I get one?

What happens to my overpayments if I remortgage?

What happens to my overpayments if I remortgage?

Can I stop overpaying if my circumstances change?

Can I stop overpaying if my circumstances change?

When's the best time to make a lump sum overpayment?

When's the best time to make a lump sum overpayment?

See How Much You Could Save

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