Overpaying 200 a month on a mortgage
An extra 200 a month on a 300,000 mortgage at 6.5% over 30 years saves 103,450 in interest and clears the debt 6 years and 11 months early. That is worth more than the 83 payments you avoid, because every extra pound comes off the balance itself and so stops earning the lender interest for the whole of the remaining term.
Year by year
| 1 | $25,154.40 | $19,328.47 | $5,825.93 | $294,174.07 | $19,328.47 |
| 2 | $25,154.40 | $18,938.29 | $6,216.11 | $287,957.96 | $38,266.76 |
| 3 | $25,154.40 | $18,521.99 | $6,632.41 | $281,325.55 | $56,788.75 |
| 4 | $25,154.40 | $18,077.80 | $7,076.60 | $274,248.95 | $74,866.55 |
| 5 | $25,154.40 | $17,603.87 | $7,550.53 | $266,698.43 | $92,470.43 |
| 6 | $25,154.40 | $17,098.20 | $8,056.20 | $258,642.23 | $109,568.63 |
| 7 | $25,154.40 | $16,558.66 | $8,595.74 | $250,046.49 | $126,127.29 |
| 8 | $25,154.40 | $15,982.99 | $9,171.41 | $240,875.07 | $142,110.27 |
| 9 | $25,154.40 | $15,368.76 | $9,785.64 | $231,089.43 | $157,479.03 |
| 10 | $25,154.40 | $14,713.40 | $10,441.00 | $220,648.43 | $172,192.43 |
| 11 | $25,154.40 | $14,014.15 | $11,140.25 | $209,508.18 | $186,206.58 |
| 12 | $25,154.40 | $13,268.06 | $11,886.34 | $197,621.84 | $199,474.64 |
An estimate, not financial advice. Figures are illustrative and depend on assumptions listed below. Check anything you plan to act on with a qualified adviser or the provider itself.
The worked example, drawn. The debt falls slowly at first and the interest line crosses it well before the end.
The saving is not proportional. An extra 100 a month saves 60,996 and an extra 200 saves 103,450, which is 1.7 times as much rather than twice.
The contractual payment does not fall. The lender keeps collecting 1,896.20 and the term shortens instead, unless you ask for the payment to be recalculated.
Overpaying is worth most in the early years, when nearly all of an ordinary payment is interest and almost none of it is the debt.
How it works
The formula
i = annual rate / 12 (or (1 + annual rate)^(1/12) - 1)
n = 12 x term in years
payment = P x i x (1 + i)^n / ((1 + i)^n - 1)
Then, for each month until the balance reaches zero:
interest = balance x i
balance = balance + interest - (payment + overpayment)
The final payment is whatever settles the balance, so it is
a few pounds different from all the others.
where
P = amount borrowed, less any one-off overpayment
i = the monthly interest rate
n = the number of contractual payments
What it assumes
- The rate never changes. A fixed deal lasts two to five years, not the whole term, so the payment shown after the fix ends is a guess and nothing more.
- Interest is charged on the balance at the start of each month and the payment is applied at the end of it. This is the ordinary-annuity convention the payment formula itself assumes, and the two have to agree or the schedule will not finish where the formula says it should.
- Interest is carried at full precision rather than rounded to the penny each month. A lender that rounds monthly will differ by a few pence over a 30-year term.
- Overpayments are assumed to shorten the term, not to reduce the payment. That is the default at nearly every lender, but it is worth checking, because the alternative saves far less.
- The one-off overpayment is credited with the first month's payment, so it earns its full saving from the start.
- Nothing else is included. Product fees, valuation fees, buildings insurance, ground rent, service charges and any tax are all on top of the figure shown.
Common questions
Is there a limit on how much I can overpay?
Usually. A fixed-rate deal typically allows 10% of the outstanding balance each year without penalty and charges an early repayment fee above it. The tool does not know your lender’s limit, so check it before committing to a figure — the saving is real, and so is the fee.
Is overpaying better than saving the money instead?
Arithmetically it wins whenever the mortgage rate is above what you would earn after tax, which for most people it is. What it costs is access: money paid off a mortgage is hard to get back without a further advance, so the usual advice is an emergency fund first and overpayments after.
Sources
Method written and checked by Tessalor on Jul 30, 2026.
The full method, worked example and every assumption behind this figure are on Mortgage Repayment Calculator.