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Mortgage Overpayment Calculator

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See how much interest you save and how many years you cut by paying extra each month.

Without overpaying

Payoff time25 years 0 months
Total interest$150,754

With overpaying

Payoff time18 years 10 months
Total interest$108,911
Interest saved$41,843
Time saved6 years 2 months

Why overpaying works so well

A normal payment is mostly interest at the start, so only a small slice reduces what you owe. An overpayment is different: every unit of it goes straight against the balance. That removes not just the amount paid, but all the future interest that balance would have generated for the rest of the term.

Before overpaying, check two things: whether your lender charges an early repayment fee, and whether the rate on the loan is higher than what your money would earn elsewhere. If the mortgage rate beats your savings rate, overpaying is usually the better return — and it is a guaranteed one.

200 a month extra pays back 1.22 times over, and removes 6.5 years

Every unit of overpayment goes straight against the principal, and every unit of principal removed stops accruing interest for the rest of the term. On a 300,000 mortgage at 5%, an extra 200 a month costs 56,600 in total and removes 69,211 of interest — a return you know in advance, which is unusual.

How it works

  • Recalculates the loan month by month with an additional payment applied to the principal.
  • Reports the interest saved and the years removed, which move together but not proportionally.
  • Compares several overpayment levels, since the first units bought are the most valuable.
each month: interest = balance × monthly rate
              balance = balance + interest − (payment + extra)

the saving is compounded avoided interest, not the overpayment itself

Worked example

300,000 at 5% over thirty years, with various monthly overpayments.

  1. baseline: 361 months, 279,770 of interest
  2. +50: 337 months, saves 21,663 and 2.0 years
  3. +100: 316 months, saves 39,938 and 3.8 years
  4. +200: 283 months, saves 69,211 and 6.5 years
  5. +500: 216 months, saves 124,385 and 12.1 years

The 200 case pays 56,600 extra across the shortened term and removes 69,211 of interest — 1.22 units back for every unit paid, with the mortgage cleared six and a half years early.

Reading the result

  • Overpaying is a guaranteed, tax-free return equal to your mortgage rate. At 5% that beats most savings accounts on a risk-adjusted basis — the comparison is not against hoped-for investment returns but against certain ones.
  • Timing matters enormously because interest is front-loaded. The same 200 a month started in year one removes far more than started in year fifteen, since it is cancelling interest across a longer remaining term.
  • Check the early repayment terms first. Many fixed-rate products cap penalty-free overpayment at around 10% of the balance a year, and exceeding it can trigger a charge that erases the benefit.
  • Clear higher-rate debt first. A credit card at 22% returns four times what a 5% mortgage does per unit repaid, so overpaying the mortgage while carrying card debt is the wrong order regardless of how the balances feel.

Common questions

Is overpaying better than investing the difference?
It is certain rather than expected. Overpaying returns exactly your mortgage rate with no risk and no tax; investing may return more but may not. Many people reasonably split the difference — the mistake is assuming an expected return beats a guaranteed one automatically.
Does a small overpayment even matter?
Yes, more than it looks. Fifty a month — under two a day — removes 21,663 of interest and two years from the term. The effect is not proportional to the amount, because early principal reduction compounds for the whole remaining period.