Is it better to overpay your mortgage or formally reduce the term?
Both end with you mortgage-free sooner. But one locks you into higher monthly payments; the other keeps your options open. Here's what to know — plus a calculator to compare.
Both end with you mortgage-free sooner. But one locks you into higher monthly payments; the other keeps your options open. Here's what to know — plus a calculator to compare.
You'll be mortgage-free 6 years 9 months earlier
and save £46,940 in interest.
| Without | With overpay | |
|---|---|---|
| Term | 25 years | 18 years 3 months |
| Total interest | £156,277 | £109,338 |
| You save | £46,940 · 6y 9m |
A lower interest rate could save you thousands more on top. See if you could remortgage to a better deal.
We may receive a commission if you remortgage through a partner broker. This never affects the rate you're offered.
You keep your existing mortgage term and pay extra each month (or in lump sums). Your lender shortens the term automatically as the balance drops. You can stop overpaying any time — if you have a tight month, you just pay the contractual amount and skip the extra.
This is the safer, more flexible option for most people. The interest saving is essentially identical to formally reducing the term, assuming you actually keep up the overpayments.
You ask your lender to shorten your mortgage term — say from 25 years down to 18. Your monthly contractual payment rises and is now legally required. Miss it and you're in arrears.
Why do it? Some people need the forced discipline. The interest saving is the same as overpaying the equivalent amount voluntarily — there's no maths advantage.
Overpay informally. You get the same interest saving with full flexibility. Use the calculator below to see exactly how much an extra £100, £200 or £500 per month would knock off your term.
Important: This article is for general information and is not financial advice. Always speak to a qualified UK mortgage adviser before making decisions about overpayments, remortgaging, or your specific mortgage product.