Should I Overpay My Mortgage?
Mortgage Overpayments: Monthly or Yearly?
Paying a bit extra off your mortgage can cut years off your term and save thousands in interest. But how you overpay, how much, and when all make a difference. Use our calculator to see what overpaying could do for you, then talk to us about whether it is the right move.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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Why Overpay
Every Extra Pound Comes Straight Off What You Owe
Your normal payment covers interest first. Anything extra goes directly against the balance, so you pay interest on less from that point on.
- ✓Less interest: a smaller balance means less interest every month after
- ✓Shorter term: keep your payment the same and you could be mortgage free sooner
- ✓Better rates later: a lower loan to value can open up cheaper deals when you remortgage
- ✓Flexibility: most lenders let you overpay up to 10% a year without a charge
How We Help
How to Overpay the Right Way
Five things to check before you start.
Check Your Allowance
Most fixed and tracker deals allow around 10% of the balance a year before an early repayment charge kicks in. Check your mortgage offer.
Keep a Safety Net
Money paid into your mortgage is hard to get back. Keep a few months of outgoings in savings first.
Clear Dearer Debt First
Credit cards, loans and car finance usually cost more than your mortgage. Pay those off first.
Pick Monthly or Lump Sum
Monthly overpayments start saving interest sooner. A yearly lump sum suits bonuses or irregular income.
Term or Payment
Ask your lender whether to shorten the term or lower the monthly payment. Many reduce the payment unless you tell them otherwise.
Overpayment Calculator
See What Overpaying Could Save You
Pop in your mortgage details and try a monthly overpayment, a yearly lump sum, or both.
Illustration only. Assumes your rate stays the same for the whole term and overpayments reduce your term rather than your monthly payment. Many lenders let you overpay up to 10% of your balance each year during a fixed or tracker deal without an early repayment charge, but check your own mortgage terms first.
Book a Chat →Monthly vs Yearly
Which Way Should You Overpay?
Both work. The best one depends on your income and your goals.
Monthly Overpayments
A set amount each month. Interest drops sooner, so it usually saves slightly more over time. Easy to budget for.
Talk It Through →Yearly Lump Sum
One payment a year from a bonus, savings or a windfall. Good if your income varies. Watch the 10% limit.
Get Straight Advice →Overpay or Save?
If your savings rate beats your mortgage rate after tax, saving may win. If not, overpaying often makes sense.
Check My Options →Remortgage Time
Overpaying before your deal ends can drop you into a lower loan to value band and a cheaper rate.
Book a Chat →Early Repayment Charges
Go over your allowance during a fixed deal and you could pay a charge of 1% to 5% of the extra. Always check first.
Ask a Question →Life Changes
Thinking of moving, starting a family or reducing hours? Keeping cash available may suit you better.
Talk It Through →Common Questions
Mortgage Overpayment Questions, Answered
The things people ask us most about paying off their mortgage early.
Is it better to overpay monthly or yearly?
Monthly overpayments usually save a little more because the balance drops sooner. A yearly lump sum is fine if that suits your income. The difference is often small, so pick what you can stick to.
How much can I overpay without a charge?
Most lenders allow up to 10% of your balance each year during a fixed or tracker deal. Some allow less, some more. Your mortgage offer will tell you.
Should I reduce my term or my monthly payment?
Reducing the term usually saves the most interest. Reducing the payment gives you more breathing room each month. Your lender will ask which you want, or apply a default, so check.
Is it better to overpay my mortgage or save?
It depends on your mortgage rate, your savings rate and whether you have an emergency fund. If you have expensive debt, clear that first. We can talk this through with you.
Can I get overpayments back if I need them?
Usually not. Some flexible or offset mortgages let you borrow back overpayments, but most do not. That is why a savings buffer matters.
Does overpaying help when I remortgage?
Yes, it can. A smaller balance lowers your loan to value, and lower bands often come with better rates.
Related guides
- How much can I borrow?
- How much to offer on a house in Scotland
- New build vs existing homes
- All mortgage questions answered
Written by Tony Flynn, mortgage broker at Tony Flynn Mortgages, helping homebuyers across Lanarkshire and Scotland. This page is general information, not personal advice. Speak to Tony about your own circumstances.
Get in Touch
Thinking About Overpaying? Talk to Us First
Fill in the form and we will be in touch within one working day. Tell us your balance, rate and when your deal ends, and we will give you a straight answer on the best way to use your spare cash.