Save it or overpay the mortgage?
Overpaying saves the mortgage rate. Saving earns the savings rate, less tax. Enter both to see which comes out ahead over the years you choose.
How this is calculated
Overpaying: the lump sum comes off the balance and the monthly payment stays the same, so the balance falls faster. The benefit is how much less you owe at the end of the period.
Saving: the lump sum earns the savings rate less tax, compounded monthly. The benefit is the savings pot at the end of the period.
Whichever figure is larger is ahead. The mortgage rate is effectively a tax-free, guaranteed return.
Rates used · 2026/27
| Overpaying earns | the mortgage rate, tax free |
| Saving earns | the savings rate, less any tax |
| Typical overpayment limit | 10% of the balance a year on a fixed deal |
| Access | savings yes, overpayments usually no |
Last checked July 2026. Source: HMRC and gov.uk.
Worked example
Overpaying £10,000 on a £200,000 mortgage at 4.5% leaves you owing £12,518 less after five years. Saving it at 4% with no tax grows it to £12,210, so overpaying comes out £308 ahead, though the savings stay available if you need them.
Common questions
Is it better to save or overpay my mortgage?
If your savings rate after tax is higher than your mortgage rate, saving usually wins. If it is lower, overpaying usually wins. Keeping an emergency fund first matters either way.
What about an ISA?
Interest in a cash ISA is tax free, so set the tax rate to 0 to compare.
Will overpaying reduce my monthly payment?
Usually the term shortens instead, though some lenders let you choose. This calculator keeps the payment the same.
Are there charges for overpaying?
Often not up to 10% a year on a fixed deal. Above that an early repayment charge may apply.