Lump Sum Overpayment Savings Calculator

For example, a 5,000 lump overpayment on a 200,000 mortgage at 4% with 20 years remaining saves roughly 5,965 in interest over the remaining term; the interest saved is about 119% of the overpayment. That is equivalent to a return equal to the mortgage rate. The calculation does not model investment risk, and how it compares with other uses of the money depends on your own circumstances.

What the result means

Primary is interest saved — the pure financial gain from overpaying. Secondary shows effective return on the overpayment, total interest on the new balance, and interest on the old balance.

Overpayment vs invest

The overpayment produces an illustrative return equal to the mortgage rate. That can be set against what the same money might earn in savings or investments after fees and tax, a comparison that depends on the rates, the tax treatment, and the risk each option carries. The overpayment return is fixed by the mortgage rate rather than a market return, so it does not vary with markets.

Run it with sensible defaults

Using outstanding balance of 200,000, lump sum overpayment of 5,000, interest rate of 4%, years remaining of 20 years, the calculation works out to 5,964.70. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Outstanding Balance, Lump Sum Overpayment, Interest Rate, and Years Remaining — do not pull with equal force. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

How the math works

Compares total interest on the original schedule vs a new schedule with the overpayment applied and the same monthly payment maintained. Uses standard amortisation for both. Does not account for overpayment fees (some mortgages cap overpayments at 10% of balance per year).

Stress-testing the plan

Run the calculation at your current rate, then run it again at a rate 2–3 percentage points higher. That's roughly what a product reset could bring at renewal, and it shows how the payment would look in a higher-rate world, not just today's.

What this doesn't capture

The figure shown reflects the core calculation; additional costs such as arrangement fees, valuation, legal fees, insurance, and any early-repayment charges (where applicable) sit on top and can add materially to the total cost of borrowing. Rates and product terms can also change over the life of the loan, which can shift the picture relative to this fixed-snapshot estimate.