Mortgage overpayment calculator: monthly overpayment or lump sum, which saves more interest, and the three checks to make before you pay a penny extra

Overpaying a mortgage is one of the few personal finance moves where the arithmetic is certain: the balance falls, so the interest charged on it falls, so the loan clears sooner. The questions are which shape of overpayment does more, and whether your lender will let you. This page answers the first with a worked case and the second with the two checks that matter.

What an overpayment actually does

On a repayment mortgage each month's interest is charged on the balance at the start of the month. Anything you pay above the contractual payment comes straight off the balance, so every later month's interest is slightly smaller and the loan finishes early. As the Bindler workbook's Guide sheet notes, overpaying keeps the contractual payment the same and shortens the term, which is how most lenders treat overpayments unless you ask for the payment to be recalculated (source 4). MoneySavingExpert makes the same point from the borrower's side: "ensure that any overpayment you make goes to reduce the debt (so shortening the term) rather reducing your monthly payments" (source 1).

A monthly overpayment is a small amount repeated for years. A lump sum is one large amount paid early. Which saves more depends on how much you pay and when, and they are not directly comparable unless you look at both the total interest saved and the saving per unit of extra money.

The sample case

The free calculator and the workbook share one illustrative loan: a balance of 280,000 at 4.75% with 300 months left, run three ways. Scenario A pays nothing extra. Scenario B adds a fixed 200 every month. Scenario C pays a one-off 15,000 in month one. All three schedules were recalculated with a formula engine and matched to an independent Python replica before listing (source 4).

• A, no overpayment: clears in 300 months, total interest 198,898.
• B, 200 a month extra: clears in 243 months, 57 months early. Total interest 156,391, a saving of 42,508. Total extra paid over the life of the loan: 48,483.
• C, 15,000 lump sum in month one: clears in 272 months, 28 months early. Total interest 167,675, a saving of 31,223. Total extra paid: 15,000.

Two findings sit in those lines. The monthly overpayment saves more interest in total, 42,508 against 31,223, because far more money goes in over twenty years. But the lump sum saves more per unit of extra money: about 2.08 of interest saved for every 1 paid, against about 0.88 for the monthly plan. Early money works hardest, because it has the most months of interest left to cancel. Anyone with both a lump sum and spare monthly income will usually find that the answer is both, and the workbook's Comparison sheet puts the per-unit figure beside the totals so the two shapes are judged on the same footing.

Check one: the overpayment allowance

Most fixed-rate deals cap penalty-free overpayments. MoneySavingExpert's guidance is that "fixed-rate mortgages typically have an annual overpayment limit of 10% of your TOTAL outstanding mortgage balance" and that you should "check that your lender allows you to overpay it penalty-free" (source 1). The figure varies by lender and by product, so the number that matters is the one in your own offer document, not the typical one.

Check two: early repayment charges

Paying over the allowance, or clearing the loan during a fixed or discounted period, can trigger a charge. The US Consumer Financial Protection Bureau defines a prepayment penalty as "a fee that some lenders charge if you pay off all or part of your mortgage early", typically applying "if you pay off the entire mortgage balance ... within a specific number of years (usually three or five years)", and sometimes "if you pay off a large amount of your mortgage all at once", while noting that such penalties "do not normally apply if you pay extra principal on your mortgage in small chunks at a time" (source 2). UK early repayment charges follow the same logic and are usually a percentage of the amount overpaid above the allowance. A lump sum is the shape most likely to hit one; a modest monthly overpayment rarely does.

Check three: is the mortgage the right debt to overpay

An overpayment earns a guaranteed return equal to the mortgage rate. If you also carry a credit card at 20% or a personal loan at 11%, the same money clears more interest there. The CFPB's debt-reduction guidance puts paying off the highest-rate debt first as the method that "will help you eliminate your costliest debts first, which can save you money in the long run" (source 3). The debt payoff guide covers that comparison. Keep an emergency fund too: an overpayment cannot be withdrawn if the boiler fails.

Run your own numbers

The free mortgage overpayment calculator takes your balance, rate, remaining term, a monthly extra and a lump sum, and returns the months and interest saved by each, in your browser with no sign-up. It gives the headline comparison and nothing else.

The Mortgage Overpayment Comparison workbook shows the working: three full schedules of up to 480 months each (interest on the opening balance, the contractual payment, the extra, the closing balance), a Comparison sheet with months and years to clear, total interest, total paid, total extra, the saving of B and C against A, and interest saved per unit of extra paid. Live formulas, no macros, no locked cells, Excel and Google Sheets. $12, one price.

Overpayment allowances, early repayment charges, rate changes at the end of a fix and offset accounts are outside the workbook, and its Guide says so. Arithmetic on your own numbers, not financial advice.

Sources

1. MoneySavingExpert, "Mortgage overpayment calculator": https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

2. Consumer Financial Protection Bureau, "What is a prepayment penalty?": https://www.consumerfinance.gov/ask-cfpb/what-is-a-prepayment-penalty-en-1957/

3. Consumer Financial Protection Bureau, "How to reduce your debt", 16 July 2019: https://www.consumerfinance.gov/archive/blog/how-reduce-your-debt/

4. Bindler, Mortgage Overpayment Comparison specification, Guide sheet and verification log (products/mortgage-overpay/spec.json, build.py and verify.py), figures as listed 27 September 2026.

Last checked against the sources on 28 September 2026.