Overpay Your Mortgage By How Much: The Numbers By Rate Band

You read somewhere that overpaying the mortgage is "guaranteed tax-free returns equal to your rate." You believe it. But you still have not actually decided how much to overpay, because the article that told you to overpay did not give you the numbers.

This page gives you the numbers. By rate. By amount. By time horizon. The kind of numbers that turn a feeling into a decision.

Find your rate band. Look at the overpayment amount you can actually afford. Look at the years you have left on the mortgage. Read the saving.

How This Page Works

Every number below assumes a £200,000 repayment mortgage with 20 years remaining. If your numbers are different, the maths scales roughly linearly. A £150,000 mortgage is about three-quarters of the saving. A £250,000 mortgage is about a quarter more.

The "interest saved" is the cumulative interest you avoid paying over the full remaining term if you start overpaying today and keep overpaying the same amount each month. The "term cut" is how many months earlier you finish the mortgage.

All numbers are illustrative. Your actual mortgage statement is the only number that matters for your decision. Reconfirm against your own offer before acting.

The Numbers: At 4.5%, A £200,000 Mortgage With 20 Years Remaining

Why The Rate Band Matters

The overpayment return is exactly your mortgage rate. At 3.5%, every £100 overpaid saves you £3.50 a year in interest, guaranteed. At 6.5%, every £100 overpaid saves you £6.50 a year. The same £100 of overpayment is worth nearly twice as much at 6.5% as at 3.5%.

This is why the overpay-or-invest argument flips depending on when you took the mortgage. Anyone who fixed at 1.5% to 2.5% in 2020 or 2021 has a very different question to answer from anyone fixing at 5% to 6% today. The maths is the maths. Your rate is your rate.

The Three Tests That Tell You Whether to Overpay

Test one: the pension match. If your employer offers a pension contribution match, take the full match first. A 4% employer match on a £50,000 salary is £2,000 a year of free money. The overpayment cannot compete with free money.

Test two: the emergency fund. You need three to six months of essential spending in an accessible account before any overpayment. If a boiler breaks or you lose your job, you do not want to be paying an early repayment charge to get your overpayments back.

Test three: the rate threshold. If your mortgage rate is above 5% and your pension is already maxed out for employer matching, overpaying is a strong default. Below 4%, the maths increasingly favours investing inside an ISA or SIPP. In between, split it.

The Overpayment Allowance Most People Forget to Check

Most fixed-rate mortgages allow 10% of the outstanding balance per year in overpayments without an early repayment charge. On a £200,000 mortgage, that is £20,000 a year in allowed overpayments, or £1,666 a month.

Exceed the allowance and the penalty can wipe out years of benefit. A common early repayment charge is 1% to 5% of the amount overpaid during the fixed period, depending on how far through the deal you are.

Check your mortgage terms before you set up the overpayment. The 10% allowance is a per-year limit, not a per-month one. A £1,000 monthly overpayment is £12,000 a year. That fits inside a £20,000 allowance. A £2,000 monthly overpayment does not.

If You Overpay, Automate It

Set up a standing order from your current account to your mortgage overpayment account on the day after payday. The amount should be one you can sustain through a redundancy, a baby, and a kitchen refit. If the amount is not sustainable, it is not the right amount.

Stop re-deciding every month. The decision is the decision. The action is the action. The number on the table above is the number, and you have already read it.

The One Thing to Do This Month

Before 31 August 2026, find your actual mortgage rate on your latest statement. Look at the overpayment allowance in your mortgage terms. Decide on a monthly amount you can sustain, check it fits inside the annual allowance, and set up a standing order.

Then check whether your employer offers a pension match. If they do, take the full match first. The order matters: pension match first, emergency fund second, then overpayment or investment depending on your rate band.