Go £1 over your lender's 10% annual fee-free allowance and an early repayment charge (ERC) kicks in. Here's exactly how it's calculated, how much you'll pay at Halifax, Nationwide, Santander, Barclays and NatWest, and the rare cases where breaching the cap is still the right call.
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.
The lender applies the ERC only to the excess amount above the cap — not to your entire overpayment. If your cap is £18,000 and you overpay £20,000, the ERC applies to the £2,000 over the limit.
ERC rates are spelled out in your mortgage offer. They're typically 1% to 5% of the excess, tapering across the length of your fixed deal — highest in year one, lowest in the final year.
Cap: £18,000. Overpayment: £25,000. Excess: £7,000. ERC at 3% = £210.
On most deals, that £210 fee comfortably exceeds the interest you'd save on the £7,000 excess over the remaining months of the fix — so most people stop at the cap.
Halifax 5-year fix: typically 5% year 1 → 1% year 5. Nationwide 5-year fix: typically 5%/4%/3%/2%/1%. Santander 5-year fix: typically 5%/4%/3%/2%/1%. Barclays 5-year fix: typically 5%/4%/3%/2%/1%. NatWest 5-year fix: similar tapering structure.
Two-year fixes are usually flat 1–2%. Always read your individual offer document — the ERC schedule is the most important part of any mortgage deal.
Three situations: (1) You're selling the property and the ERC is unavoidable anyway — pay it. (2) You're remortgaging to a much lower rate and the ERC is offset by years of interest saving on the new deal. (3) You're in the final year of a fix where the ERC is 1% — the breakeven calculation often tips in favour of overpaying anyway.
In every other situation, stay under the cap. Save the excess in a savings account, then deploy it on day 1 of the next allowance year.
Set a calendar reminder for your reset date (usually 1 January or your deal anniversary). Keep a simple running total of overpayments since the reset. If you're close to the cap and unsure, phone the lender — they'll quote your exact remaining fee-free allowance to the penny.
Use the calculator below — set 'Annual cap %' to 10 and the model automatically caps your overpayments so you can see what fits inside the allowance.
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.