Mortgage Overpayment Calculator 2025

Overpaying gives a guaranteed return equal to your mortgage interest rate — currently 4–6% for most borrowers. Compare this to the after-tax return available from investments. In a cash ISA you might get 4–5% tax-free. Equity investments have historically returned more but with more volatility. If you have high-rate debt (credit cards, loans) repay those first. If your mortgage rate exceeds what you can earn risk-free elsewhere, overpaying is often the right choice. Maximising your pension (especially with employer matching) should usually come first.

Most lenders automatically reduce your monthly payment when you overpay, keeping the original term. To cut years off instead, you need to specifically request that your lender keeps the payment the same (or increases it to reflect the overpayment) and shortens the term. Reducing the term saves more interest overall. Reducing the monthly payment frees up cash flow each month. If you’re uncertain about your future income, reducing the payment gives more flexibility.