How much can I overpay on my mortgage?

Most UK lenders allow you to overpay up to 10% of your outstanding mortgage balance each year without incurring early repayment charges (ERCs). Some lenders are more generous, while a few have lower limits. If your mortgage is on a standard variable rate (SVR) or you have finished your fixed-rate period, you can usually overpay as much as you like without penalty.

What are early repayment charges?

Early repayment charges (ERCs) are fees your lender may charge if you overpay beyond the allowed limit or repay your mortgage in full during a fixed-rate or discounted-rate period. ERCs typically range from 1% to 5% of the amount overpaid, and they usually decrease each year of the deal. Always check your mortgage terms before making large overpayments.

Is it better to overpay my mortgage or save?

This depends on your mortgage interest rate versus the return you could earn on savings or investments. If your mortgage rate is higher than the after-tax return on savings, overpaying is likely the better option. For example, if your mortgage rate is 4.5% and your savings account pays 3% (before tax), overpaying your mortgage provides a guaranteed better return. However, always ensure you have an emergency fund of 3–6 months' expenses before making overpayments.

Should I make lump-sum or regular overpayments?

Both methods save you money, but regular overpayments tend to be more effective because they reduce your balance earlier, meaning less interest accrues over time. A lump-sum payment is useful when you receive a bonus or inheritance. Ideally, combine both approaches: set up a regular monthly overpayment and make additional lump-sum payments when possible.

Mortgage Overpayment Calculator UK

How Do Mortgage Overpayments Work?

A mortgage overpayment is any amount you pay above your required monthly mortgage payment. Overpayments go directly towards reducing your outstanding capital balance, which means you are charged less interest in subsequent months. This creates a compounding effect: each overpayment reduces your balance, which reduces the interest charged, which means more of your future payments go towards capital.

There are two main ways to overpay:

Regular overpayments — Increasing your monthly payment by a set amount (e.g. paying £100 extra each month).
Lump-sum overpayments — Making one-off additional payments, such as when you receive a bonus, inheritance, or tax refund.

Both approaches can save you a significant amount of interest and help you become mortgage-free years earlier than planned.

The 10% Annual Overpayment Limit

Most UK mortgage deals — particularly fixed-rate and discounted-rate products — allow you to overpay up to 10% of your outstanding balance each year without penalty. This limit resets annually on the anniversary of your mortgage.

What counts towards the 10% limit?

Regular monthly overpayments
Lump-sum payments
Any amount above your contractual monthly payment

Example

If your outstanding mortgage balance is £180,000, you can overpay up to £18,000 in that year without incurring early repayment charges.

Once you move to your lender’s standard variable rate (SVR) — typically after your fixed or discounted period ends — you can usually overpay unlimited amounts without penalty. This is one reason many borrowers make large overpayments during SVR periods while arranging a remortgage.

Early Repayment Charges (ERCs)

If you exceed your overpayment allowance during a fixed or discounted period, your lender will charge an early repayment charge. These can be substantial:

Typical ERCs: 1–5% of the amount overpaid beyond the limit
ERCs usually decrease each year of your deal (e.g. 5% in year one, 4% in year two, etc.)
Some lenders charge ERCs on the full overpayment, others only on the amount exceeding the 10% limit

Always check your mortgage offer document or contact your lender before making large overpayments.

How Much Can You Save? A Worked Example

Consider a £200,000 repayment mortgage at 4.5% over 25 years:

Scenario	Monthly Payment	Total Interest	Mortgage Term	Interest Saved
No overpayment	£1,111	£133,400	25 years	—
£100/month overpayment	£1,211	£108,600	21 years 3 months	£24,800
£200/month overpayment	£1,311	£89,500	18 years 6 months	£43,900
£500/month overpayment	£1,611	£57,200	13 years 4 months	£76,200

Even a modest overpayment of £100 per month saves nearly £25,000 in interest and takes almost 4 years off your mortgage term. The savings become even more dramatic at higher overpayment levels.

Lump Sum vs Regular Overpayments

Both approaches are beneficial, but they work slightly differently:

Regular overpayments

Reduce your balance steadily throughout the year
Interest savings begin immediately
Easy to budget for as part of your monthly outgoings
Typically more effective pound-for-pound because they reduce the balance earlier

Lump-sum overpayments

Useful for windfalls such as bonuses, inheritance, or savings
Make a larger immediate impact on your balance
Can be timed strategically (e.g. just before your annual overpayment limit resets)
Combine with regular overpayments for maximum effect

Should You Overpay or Invest?

The decision comes down to comparing your mortgage interest rate with the after-tax return you could earn elsewhere:

If your mortgage rate is higher than available savings rates, overpaying is typically the better choice — and it is a guaranteed, risk-free return.
If you could earn more by investing (e.g. in a stocks and shares ISA), the potential return may outweigh overpaying — but comes with risk.
Always maintain an emergency fund of 3–6 months’ expenses before overpaying.
Check whether you have maximised your ISA allowance and pension contributions, as these may offer tax-efficient returns.

Use our mortgage calculator to model different scenarios and see how overpayments affect your total costs. You can also explore our mortgage affordability calculator to understand your overall financial position.