A Guide To Overpaying Your Mortgage

Buying a home is one of the biggest financial commitments most of us will ever make. For many, a mortgage feels like a lifelong companion — but what if you could shorten that journey and save thousands of pounds in the process? That’s where mortgage overpayments come in.

Overpaying your mortgage means paying more than the minimum your lender requires each month. It might sound small — an extra £50 or £100 here and there — but over time, those extra payments can shave years off your mortgage term and cut down the amount of interest you pay.

In this guide, we’ll cover what mortgage overpayments are, the pros and cons, how much you can overpay, and some practical tips to help you decide if it’s the right move for you.

What Does It Mean to Overpay Your Mortgage?

An overpayment is any amount you pay on top of your regular monthly mortgage instalment. These extra payments reduce the balance you owe, which means less interest is charged in the long run.

There are generally two ways to overpay:

Lump sum payments – one-off amounts, often from bonuses, savings, or inheritance.
Regular monthly overpayments – smaller amounts added to your monthly payment.

Why Consider Overpaying Your Mortgage?

The benefits of mortgage overpayments are clear:

Save money on interest – the less you owe, the less interest builds up. The more you are able to pay off, the less interest you will pay over the length of your mortgage term.
Become mortgage-free sooner – potentially shaving years off your term.
Peace of mind – many people value the security of knowing their biggest debt is shrinking faster.

How Much Can You Overpay?

Most lenders allow you to overpay up to 10% of your mortgage balance each year without penalties, but this varies. Always check your mortgage agreement for early repayment charge rules. Our mortgage provider allows us to currently overpay 20% of our mortgage balance every year, but we haven’t managed to get close to this yet!

It’s also important to tell your lender how to apply the overpayment:

Reduce the term – keep your monthly payments the same, but shorten the mortgage.
Reduce monthly repayments – lower your monthly bills, though interest savings are smaller.

Lump Sum vs. Regular Overpayments

Lump sum overpayment: Ideal if you receive a bonus, inheritance, or sell an asset. A one-off large payment can significantly reduce your balance.
Regular monthly overpayments: Even an extra £50 or £100 a month adds up over time, helping you save on interest while still being manageable.

The best method depends on your financial situation — many people find a mix of both works well.

We are currently using Sprive and Quidco to build additional payments for our mortgage on top of our monthly overpayment. Quidco is a straightforward cashback site, so every time I make a purchase, I make sure to check whether there is any cashback for the site. If there is, we will make a % back into our Quidco account for the purchase. I simply move this to the bank and make the overpayment to our mortgage.

Sprive works similarly in that you get cashback; however, you purchase gift cards through Sprive to make your purchase, and then you will get your cashback for this through the Sprive app, which can be paid directly to your mortgage provider.

If you have not signed up for either of these, we have 2 referral links below that get you a little additional bonus when you sign up –

Quidco – You will receive a £20 bonus once you have earned your first £5 cashback.

Sprive – Enter the code EMU155G4 on sign up to receive a bonus £5 towards your first mortgage payment.

Pros and Cons of Overpaying Your Mortgage

Pros:

Significant interest savings – The amount of interest paid back over the length of your mortgage is eye-watering, so anything you can do to reduce it will be worth it.
Clear your mortgage years earlier – As the biggest debt most of us will ever have, being able to clear your mortgage early opens up so many options for you in future.
Reduce financial stress – With the unknown in the housing market and interest rates, clearing it will hopefully bring a bit of peace of mind over time as the balance reduces.

Cons:

Less cash available for emergencies – If you are diverting your extra cash into overpaying the mortgage, it does mean you will have less monthly spare cash. However, with overpayments, you are able to cancel them if your circumstances change.
Potential early repayment charges – Always worth checking with your mortgage provider as to what terms they offer on this.
It may not be the best move if you have higher-interest debts or better investment opportunities elsewhere. Take time to look at what your options are before you jump into overpayments. For us, it is the plan to be mortgage-free in less than 10 years so we can relocate, but everyone’s circumstances are different.

Alternatives to Overpaying Your Mortgage

Before you start, consider whether your money could work harder elsewhere:

Build an emergency fund – typically 3–6 months of expenses.
Pay off higher-interest debts first – such as credit cards or personal loans.
Invest for the future – pensions, ISAs, or stocks may offer higher returns than mortgage savings.

It’s all about balance — overpaying doesn’t need to be all or nothing.

Example: How Overpayments Can Save You Money

Let’s imagine you have a £150,000 repayment mortgage over 25 years with an interest rate of 5%.

Without overpayments:
Your monthly payment would be around £877. Over the full term, you’d pay about £113,000 in interest on top of the loan.
With a £200 monthly overpayment:
If you paid £1,077 each month instead, you’d clear your mortgage in just 17 years and 6 months.
- That’s more than 7 years earlier.
- You’d save around £46,000 in interest.

Even a smaller overpayment makes a difference. Adding just £50 per month would shorten the term by over 2 years and save you thousands.

Frequently Asked Questions About Mortgage Overpayments

1. Can I stop overpaying if I need to?
Yes — overpayments are flexible. If your circumstances change, you can reduce or stop them at any time.

2. Will I face early repayment charges?
Most lenders let you overpay up to 10% per year without fees, but always check your terms.

3. Should I reduce the term or lower the monthly payments?
Reducing the term usually saves the most interest. Lower payments free up cash flow but don’t reduce costs as much.

4. What if I remortgage in the future?
Overpayments still help — a smaller balance could mean better rates when you switch deals.

5. Is it better to overpay or save/invest?
It depends. If your mortgage rate is higher than what you’d earn from savings, overpaying makes sense. But don’t neglect emergency savings or high-interest debt.

Conclusion

Overpaying your mortgage isn’t about throwing every spare penny at your loan — it’s about making smart, manageable choices that can add up to big savings over time. Whether you choose a one-off lump sum or add a little extra each month, even small steps can make a powerful difference.

The key is balance: consider your other financial priorities before committing. But if becoming mortgage-free sooner and saving on interest appeals to you, overpayments can be a simple and effective strategy to build a more secure financial future.