Mortgage Overpayment Calculator
Discover the power of principal overpayments. See exactly how much interest you save and how much faster you'll own your home.
The current outstanding principal on your mortgage
Your current mortgage APR
How many years are left on your loan
Additional amount you will pay toward the principal every month
How does mortgage overpayment work?
Mortgage overpayment involves paying more than the required monthly payment. This extra amount goes directly toward the principal balance of the loan. Because the principal is reduced faster, less interest accrues over time, which significantly shortens the loan term and reduces the total amount paid to the lender.
Is it always better to overpay my mortgage?
Generally yes, but consider your interest rate. If your mortgage rate is very low (e.g., 3%) and you can earn a higher return in a savings account or index fund (e.g., 5-7%), it may be mathematically better to invest the extra cash. However, overpaying provides a guaranteed return equal to your mortgage interest rate and the psychological benefit of being debt-free sooner.
Are there penalties for overpaying?
Many mortgages have "prepayment penalties" or annual limits on how much you can overpay (often 10% of the balance per year). Always check your loan agreement or speak with your lender to ensure your extra payments are applied to the principal and that you aren't triggering fees.
Should I overpay monthly or in one lump sum?
Mathematically, paying as early as possible is best because interest is calculated on the remaining balance. A lump sum payment at the start of the loan saves the most interest. However, consistent monthly overpayments are easier to budget and still provide massive savings over the life of the loan.