See how much you save by overpaying part of a loan: the interest and time saved, if you keep the same monthly payment.
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Enter the balance, rate, remaining term, lump sum and any ERC %. Mortgages often allow 10%/year overpayment ERC-free — set the charge to 0 within that.
Same monthly payment kept, so the loan clears sooner. Fixed-rate mortgages carry a tapering ERC (often 5/4/3/2/1%), usually with a 10%/year penalty-free overpayment allowance; variable-rate loans are normally penalty-free.
Interest saved ≈ 43,519 £, Time saved 3 years 7 monthsIndicative loan figures. The payment uses the annuity formula (fixed rate). The real interest and any early repayment charge depend on the lender and the Bank of England base rate — the figures here are estimates. Instant in-browser calculation, no account. Last updated: 11 July 2026 · Bank of England base rate.
⚖︎ Results are for informational purposes and do not constitute tax advice. For specific situations, consult a licensed accountant or the relevant tax authority.
By overpaying an amount and keeping the same monthly payment, the loan is cleared sooner, and the interest for the removed months is saved:
On a £200,000 balance over 20 years at 5%, a £20,000 lump-sum overpayment shortens the loan by about 3 years and saves roughly £30,000 in interest.
The saving comes from the interest you no longer pay on the amount you clear early. The sooner and the more you overpay, the greater the total interest saved.
The total interest of the loan without an overpayment is compared with the total after the balance is reduced, keeping the same monthly payment. The difference, minus the amount overpaid, is the interest saved.
Reducing the term (keeping the payment the same) saves significantly more interest than reducing the payment (keeping the term), for the same amount overpaid.
It depends on the deal. Most UK mortgages let you overpay up to 10% of the balance each year with no penalty, but overpaying more within a fixed or discounted period can trigger an early repayment charge (ERC). Personal loans may charge up to about one to two months' interest to settle.
It is most effective early in the loan, when the balance and the interest part of each payment are largest. Toward the end most of the payment is already principal and the saving shrinks.
Compare the loan rate with the net return you could earn elsewhere, and remember an easy-access saving account is protected by the FSCS up to £85,000 per person, per bank. If the loan rate is higher than what you would earn after tax, overpaying is usually the better, risk-free choice.
Full repayment closes the loan; a partial overpayment reduces the balance and shortens the term or the payment. Choose partial to keep some liquidity, but use surplus cash, not your emergency fund.
Using savings to reduce the balance lowers your total cost but also cuts your available cash. Keep an emergency fund of a few months' outgoings intact before overpaying large amounts.