00 / Calculator
Mortgage calculator
For most people in the UK, the mortgage is the biggest line in the monthly budget. A small change in rate, term or overpayment can move tens of thousands of pounds over the life of the loan.
02 / What if
With and without overpayments.
| Without | With | Difference | |
|---|---|---|---|
| Term | 25 years | 25 years | No change |
| Interest | £188,443 | £188,443 | £0 saved |
| Total paid | £438,443 | £438,443 | £0 less |
03 / Balance
Amortisation curve.
04 / Q&A
Mortgage overpayment questions.
Should I overpay my mortgage or invest the money?
It comes down to the rates. If your mortgage rate is higher than the after-tax return you can earn elsewhere, overpaying is effectively a guaranteed, tax-free return equal to your mortgage rate. Build a 3 to 6 month emergency fund first, because mortgage overpayments are not as liquid as cash savings.
What is an Early Repayment Charge?
An ERC is a fee charged if you repay more than the allowed amount during a fixed, tracker or discounted rate period. It is often 1% to 5% of the excess overpayment and commonly tapers down each year.
How much can I overpay without penalty?
Most UK fixed-rate mortgages allow penalty-free overpayments of up to 10% of the outstanding balance each year. On a £250,000 mortgage, that is about £25,000 in year one, so normal monthly overpayments are often comfortably inside the limit.
Why is most of my early payment interest?
Interest is calculated on the outstanding balance, which is highest at the start. On the default £250,000 mortgage at 5% over 25 years, roughly 71% of year-one payments go to interest and only 29% reduces the loan.
Should overpayments reduce my term or monthly payment?
Reducing the term normally saves more interest because the loan is cleared sooner. Reducing the payment is gentler on monthly cashflow, so confirm with your lender which option they apply.
What happens when my fixed rate ends?
You usually move onto the lender's Standard Variable Rate unless you remortgage. SVRs are commonly higher than fixed deals, so many borrowers arrange a new product before the fixed rate expires.
Important
This calculator gives an indicative figure based on the inputs provided. Actual mortgage payments depend on your lender's terms, including how interest is calculated, product fees, cashback and overpayment rules. ERC rules vary between lenders. This is not financial advice; for a regulated mortgage recommendation, speak to a qualified mortgage broker.
Running these numbers as part of broader financial planning? Lean Ledger works with limited company directors on tax-efficient structures that can free up cash for things like overpayments.
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