Answers · UK 2025/26

Is it worth overpaying my mortgage by GBP 200 a month?

Often yes. Overpaying GBP 200 a month on a GBP 200,000 mortgage at 5% over 25 years can cut the term by around 5 years and save roughly GBP 30,000 in interest, as long as you stay within your lender's penalty-free overpayment limit.

Last updated: 10 June 2026Last reviewed: 10 June 2026How we verify

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Regular overpayments reduce your outstanding balance faster, so future interest is charged on a smaller amount - the saving compounds over time. Worked example: a GBP 200,000 repayment mortgage over 25 years at 5.0% has a normal monthly payment of about GBP 1,169. Adding GBP 200 a month (GBP 1,369 total) typically clears the loan around five years early and saves in the region of GBP 30,000 of interest across the term. Two important checks: first, most lenders allow penalty-free overpayments of up to 10% of the balance each year - exceed that during a fixed deal and you may face an early repayment charge, so confirm your annual allowance. Second, weigh overpaying against alternatives. If your mortgage rate is 5% but a savings account or ISA pays more after tax, saving may win; pension contributions attract at least 20% basic-rate relief, which can beat mortgage interest for higher earners. Clearing expensive debt (credit cards at 20%-plus) should come first, and keep an emergency fund before locking money into the house, since overpayments are hard to get back. For most owner-occupiers with no higher-interest debt and a funded safety net, overpaying is a low-risk, guaranteed return equal to your mortgage rate. Use the mortgage overpayment calculator to model your exact term and interest saving, and the savings calculator to compare. See gov.uk and MoneyHelper for further guidance.