Guide · Updated 2026-10-08
Mortgage Overpayments: A Worked Example of Time and Interest Saved
What a monthly overpayment or a lump sum does to a repayment mortgage, with figures from a £200,000 example, and the lender rules to check first.
Paying extra on a repayment mortgage cuts the balance on which interest is charged, so the loan clears sooner and costs less. How much you save depends on the size and timing of the extra payments. The Mortgage Overpayment Calculator works it out, and this page shows a worked example.
The example
A fictional mortgage: £200,000 balance, 4.5% interest, 25 years remaining. The normal monthly payment is £1,111.66, and over the full term the borrower pays £133,499 in interest (£333,499 in total).
Option 1: £200 extra every month
| No overpayment | £200 a month extra | |
|---|---|---|
| Time to clear | 25 years 0 months | 18 years 11 months |
| Total interest | £133,499 | £97,219 |
The mortgage ends 6 years 1 month sooner and saves £36,280 of interest.
Option 2: a £10,000 lump sum now
| No overpayment | £10,000 lump sum | |
|---|---|---|
| Time to clear | 25 years 0 months | 22 years 10 months |
| Total interest | £133,499 | £114,199 |
One payment of £10,000 saves £19,300 of interest and takes 2 years 2 months off the term. The money works earlier, so one lump sum early on does more per pound than the same money spread over years.
What the calculator assumes
- One fixed interest rate for the whole period. Your real rate may change when a fixed deal ends.
- Extra money applied straight to the balance.
- No fees or early repayment charges.
Check with your lender first
- Overpayment limits. Many fixed deals allow only a set share of the balance each year before an early repayment charge applies. Ask for the exact limit and what counts.
- How extra money is used. Some lenders reduce the term, others reduce the monthly payment, and you may need to ask for the one you want.
- Other uses of the cash. Compare the interest saved with an emergency fund or with savings, and think about whether you could need the money back.
Frequently asked questions
Is it better to overpay monthly or in a lump sum? A lump sum paid earlier saves more interest per pound, but monthly overpayments are easier to afford and still make a large difference over time.
Can I get the money back? Usually not without borrowing again, unless the lender offers a payment-holiday or drawdown feature.
This page gives general information with fictional figures. It is not financial advice, and you should check your own terms.