What does overpaying your mortgage by £100, £200 or £500 a month actually do?
Drop an extra £200 into the mortgage payment each month on a £200,000 loan and you cut about six years off the term and roughly £34,000 off lifetime interest. Drop £500 and you take 11 years off the term and over £60,000 off the bill. The maths is mechanical, but most calculator output collapses it into one row of small print.
This piece runs the full table at every step from £50/month to £1,000/month so you can see exactly where the curve bends — and the practical limits set by the 10% annual overpayment cap that almost every UK fixed-rate product applies.
The baseline
A £200,000 capital-and-interest mortgage at the Bank of England's published 75% LTV 5-year fix rate of 4.32% (April 2026 quoted-rate file) over 25 years costs £1,091.33 a month. Across the full term that pays back £327,399 — £200,000 of principal and £127,399 of interest.
That £1,091.33 number is also where most articles stop. Below is what changes when a fixed monthly overpayment is added on top.
What different overpayments do
All figures: £200,000 loan, 4.32% interest, capital-and-interest, 25-year original term. Overpayment held flat for the full life of the loan or until the balance reaches zero, whichever comes first.
| Monthly overpayment | New total monthly | Term ends | Years cut | Lifetime interest | Interest saved |
|---|---|---|---|---|---|
| £0 (baseline) | £1,091.33 | 25 yrs 0 mo | — | £127,399 | £0 |
| £50 | £1,141.33 | 23 yrs 2 mo | 1 yr 10 mo | £116,506 | £10,893 |
| £100 | £1,191.33 | 21 yrs 7 mo | 3 yrs 5 mo | £107,408 | £19,991 |
| £200 | £1,291.33 | 18 yrs 11 mo | 6 yrs 1 mo | £93,034 | £34,365 |
| £300 | £1,391.33 | 16 yrs 11 mo | 8 yrs 1 mo | £82,157 | £45,243 |
| £500 | £1,591.33 | 14 yrs 0 mo | 11 yrs 0 mo | £66,720 | £60,679 |
| £1,000 | £2,091.33 | 9 yrs 10 mo | 15 yrs 2 mo | £45,603 | £81,796 |
Numbers come from a straight amortisation schedule against the BoE 75LTV5Y April 2026 file. You can run the same scenario, change the loan size, or compare two products side-by-side in the Homecost mortgage comparison calculator (pre-seeded at £240k purchase, £40k deposit) — open the Overpayments toggle on the demo product and dial in your own number.
Why the curve bends where it does
The shape of the table is structural, not accidental. Three things are happening at once.
First, every pound of overpayment goes 100% to principal — there is no interest charged on it. So a £100 monthly overpayment in Month 1 reduces the balance from £200,000 to £199,808.66 (£191.33 of regular principal plus the £100 overpayment), and from that point onward every monthly interest charge is calculated on the lower balance.
Second, that compounds. The interest you don't pay in Month 1 frees a little extra principal repayment in Month 2, which frees a little more in Month 3, and so on. The benefit grows over time — which is why a £50 overpayment for 25 years saves £10,893, not the £15,000 you might naively expect (£50 × 300 months).
Third, the curve is sub-linear. Doubling £50/month to £100/month adds about £9,100 in lifetime saving (an 83% bump). Doubling £100/month to £200/month adds about £14,400 (72%). Doubling again to £400/month would add roughly £15,000 (smaller bump again). Past a point, the loan is being paid off so quickly that there's simply less interest left to save.
What overpaying does to equity built
The other lens is equity. Compounding interest savings are abstract; the figure that matters at remortgage is how much of the home you actually own. Here is the equity built by Year 5 under the same £200k / 4.32% / 25-year baseline:
| Monthly overpayment | Equity at Year 5 | Extra equity vs no overpayment |
|---|---|---|
| £0 | £24,819 | — |
| £50 | £28,161 | +£3,342 |
| £100 | £31,503 | +£6,684 |
| £200 | £38,187 | +£13,368 |
| £300 | £44,871 | +£20,052 |
| £500 | £58,239 | +£33,420 |
| £1,000 | £91,659 | +£66,840 |
At a £222,222 purchase price (90% LTV), a baseline borrower has roughly 11.2% equity at Year 5; the £200 overpayer is sitting at around 17.2%, which is typically enough to drop into the 80% LTV banding at remortgage. The companion piece on equity build vs rent paid covers the LTV-banding step-down at remortgage in more depth.
The 10% annual cap
Almost every UK fixed-rate mortgage allows penalty-free overpayments up to 10% of the outstanding balance per calendar year (or product anniversary year) while the fixed rate is in force. On a £200,000 loan, that ceiling is £20,000/year — about £1,667/month equivalent. Above the cap, the lender's early repayment charge (ERC) kicks in on the excess, typically 1-5% depending on how many years are left on the fix.
The 10% cap is a general feature of most major lenders' fixed products (Halifax, Nationwide, NatWest, HSBC and Santander all publish broadly similar terms) but the exact figure, whether it resets on each anniversary, and whether unused allowance carries over differs between lenders. Tracker and discount products often allow unlimited overpayment. Off-fix variable rates almost always allow unlimited overpayment.
The practical implication: at the overpayment levels covered in the table above (£50-£1,000/month, or £600-£12,000/year), every scenario sits well under the typical £20,000 annual cap on a £200,000 loan. Borrowers running £1,500+/month overpayments — or those making large lump-sum payments — are the ones who need to check the small print.
You can model lump-sum and monthly overpayments together — including the ERC interaction if you go over the cap — in the Homecost mortgage comparison calculator.
The implicit "return" on an overpaid pound
This is where the maths gets practically interesting. A pound used to overpay the mortgage avoids being charged interest at the mortgage rate. On the worked example, that is 4.32% per year, guaranteed, tax-free — because mortgage interest you don't pay is not income, so it is not subject to tax.
To match that with a taxable savings account, you would need:
| Taxpayer band | Gross savings rate needed to match 4.32% mortgage overpayment |
|---|---|
| Personal Savings Allowance unused (interest under £1,000 basic / £500 higher) | 4.32% gross |
| Basic-rate (20%) above PSA | 5.40% gross |
| Higher-rate (40%) above PSA | 7.20% gross |
| Additional-rate (45%) above PSA | 7.85% gross |
The Personal Savings Allowance (PSA) gives basic-rate taxpayers their first £1,000 of interest tax-free and higher-rate taxpayers their first £500. Cash held in an ISA shelters interest from tax entirely, so the comparison there is gross-vs-gross.
That tells you what overpaying avoids. It does not tell you whether overpaying is the right call for any individual saver — that depends on emergency-fund position, the rate available on a chosen savings or investment vehicle, the offset-mortgage option (where the cash stays accessible), and the borrower's appetite for liquidity vs interest saving. This is general information, not advice. Speak to a qualified financial adviser before acting.
Scaling the table to your loan size
The structural shape — sub-linear, compounding, six-years-off-for-£200 at the typical UK mortgage rate — holds across loan sizes. The absolute figures scale roughly proportionally with loan size, and the term cut shrinks as the loan gets bigger (because £200/month is a smaller percentage of a £400k loan than a £200k one).
Approximate scaling at 4.32% / 25-year baseline:
| Loan size | £200/month overpayment: years cut | Lifetime interest saved |
|---|---|---|
| £100,000 | ~10 yrs | ~£35,000 |
| £200,000 (baseline) | ~6 yrs | ~£34,000 |
| £300,000 | ~4 yrs 6 mo | ~£32,000 |
| £400,000 | ~3 yrs 6 mo | ~£29,000 |
The same maths in the opposite direction — extending the term to cut the monthly bill — is covered in the 25-year vs 35-year term extension piece, where moving a £200,000 loan from a 25-year to a 35-year term saves £99/month but adds £43,584 in lifetime interest.
Worked example: a £240,000 home with a £200,000 mortgage
Most borrowers think about overpayments in the context of a real purchase, not an abstract loan. Take a £240,000 home with a £40,000 deposit — typical of the 90% LTV market in the North-West and Yorkshire — putting a £200,000 mortgage on the table.
At the baseline 4.32% / 25-year structure:
- Monthly payment: £1,091.33
- Lifetime cost of the loan: £327,399 (£200k principal + £127,399 interest)
- Equity at Year 5: £24,819 (≈10.3% of property value, assuming flat house prices)
With a £200/month overpayment maintained throughout:
- Monthly payment: £1,291.33
- Lifetime cost: £293,034 (£200k principal + £93,034 interest)
- Equity at Year 5: £38,187 (≈15.9% of property value, assuming flat house prices)
- Term ends 6 years 1 month earlier
The extra £12,000 spent in the first 5 years (60 × £200) becomes £13,368 of additional equity by Year 5 — because every overpaid pound also avoids the interest it would otherwise have triggered on the higher remaining balance.
You can re-run the same scenario at your own loan size, deposit and rate in the Homecost mortgage comparison calculator. For a sense of what a £200,000 mortgage looks like before any overpayments, the base £200k monthly cost piece covers the standard payment table and the rate-sensitivity matrix.
A note on what this article does not cover
Three things are deliberately out of scope:
- Lump-sum overpayments and ERC interaction. The table above assumes a constant monthly overpayment. Big single payments (inheritance, bonus) need a separate look at the 10% annual cap and the lender's ERC schedule, especially on year 1 or year 2 of a 5-year fix.
- The rate-shock case. The table assumes the 4.32% rate persists for the life of the loan. In reality, fixed-rate products reset every 2-5 years. The rate-stress-test piece on buy vs rent breakeven covers what a reset to a higher rate does to total cost — but the overpayment maths reduces exposure to rate-shock because the balance you are resetting on is smaller.
- Offset mortgages and savings tax. Offset products let cash savings shadow-reduce the mortgage balance for interest purposes without actually paying it down. The implicit return is the same 4.32% tax-free, but the cash stays accessible. They are a separate product category and worth their own write-up.
For more on the cost side of the same housing decision, browse the Cost Intelligence category for the full set of payment, equity and rate-sensitivity pieces.
Methodology: monthly amortisation schedule against the Bank of England 75% LTV 5-year fix quoted rate of 4.32% (April 2026 file). Based on 30,980,257 Land Registry transactions and the published BoE quoted-rate series. Data fetched 2026-06-04. This is general information, not financial advice. Speak to a qualified financial adviser before acting.