Mortgage Overpayment Calculator

Why a small overpayment has an outsized effect

On a repayment mortgage, your monthly payment is split between interest (the lender's charge on the outstanding balance) and principal (the actual debt you're clearing). Early in the loan almost all of your payment is interest, because the balance — and therefore the interest charged on it — is still large. An overpayment is special because every extra dollar goes straight to principal, skipping the interest split entirely. That smaller balance is then charged less interest in every single future month, so the saving compounds. This calculator amortizes your loan twice — once at the standard payment, once with your overpayment added — and shows the difference in time and total interest.

The math behind the standard payment

Before it can show savings, the tool calculates your normal monthly payment using the standard amortization formula. With principal P, monthly rate r (annual rate ÷ 12 ÷ 100), and total months n:

payment = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)

It then steps through the loan month by month. Each month the interest is balance × r, the principal portion is the payment minus that interest, and the balance drops by the principal. With an overpayment, the same base payment plus your extra is applied, so principal falls faster and the loop reaches zero in fewer months. The tool runs this real amortization schedule rather than approximating, which is why its interest figures match what a lender would actually charge.

A worked example

Take a $250,000 balance at 3.5% over 25 years. The standard payment works out to about $1,252/month, and over the full term you'd pay roughly $125,000 in interest. Now add a $200 monthly overpayment. That extra $200 attacks the principal every month, so the loan clears years early — and because the balance is lower the whole way down, the total interest drops by a substantial five-figure sum. The tool surfaces three headline numbers: time saved, interest saved, and the new payoff term, then backs them up with a side-by-side comparison table.

What each result actually tells you

The first-12-months breakdown is the most eye-opening part: it shows how, even early on, your overpayment is already shifting the principal/interest ratio in your favor, accelerating the snowball.

Genuine use cases

• Deciding what to do with a raise. Test rounding your payment up to the next hundred and see the years it shaves off.
• Comparing overpayment versus investing. The "interest saved" figure is effectively a guaranteed, tax-free return at your mortgage rate — a useful benchmark against what an investment might yield.
• Planning a lump-sum strategy. Convert an expected bonus into an equivalent monthly figure to estimate its impact on the term.
• Sanity-checking a remortgage. See how aggressively overpaying could close out a loan before a fixed-rate period ends.

Common mistakes and caveats

• Ignoring overpayment limits. Many mortgages cap penalty-free overpayments (often around 10% of the balance per year). This tool shows the ideal benefit; check your lender's terms before committing.
• Assuming the rate never changes. The calculation uses one fixed rate for the whole term. On a variable or fixed-then-revert mortgage, your real savings will differ as the rate moves.
• Forgetting an emergency fund. Money locked into a mortgage is hard to get back. Overpaying is powerful, but not at the cost of accessible savings for emergencies.
• Reading "monthly payment" as rising. Your required payment doesn't increase — the overpayment is voluntary money on top. The table's "with overpayment" payment column simply adds your chosen extra.

Why timing matters as much as amount

One subtlety the schedule makes visible: an overpayment is most powerful early in the loan. Because the balance is largest at the start, that's when interest is accruing fastest, so a dollar of principal paid in year one saves more total interest than the same dollar paid in year twenty. The implication is practical — if you can only afford to overpay for part of the term, doing it at the beginning beats doing it at the end. Try entering the same overpayment with a near-full remaining term versus a few years left, and watch how much larger the "interest saved" figure is when more of the loan still lies ahead.

Privacy

Every figure is computed in your browser. The loan amount, rate, and overpayment you enter never leave the page — there is no account, no server call, and the calculator runs fully offline, so your financial details stay on your device.