Mortgage overpayments: small sums add up

UK homeowners could collectively save £2.3bn on mortgage interest each year by making overpayments, but they need help to make the first move. 

According to recent research¹, homeowners could be making combined annual overpayments worth £5.3bn, but 40% say they lack the confidence to take the plunge. As a result, only a third are currently making overpayments on their mortgages. 

Most lenders allow you to make overpayments of up to 10% of your mortgage balance each year without incurring any penalties. When you make an overpayment, it doesn’t just reduce the total interest paid but also the overall term. 

An overpayment could be a large one-off sum or a small regular payment: even as little as £50 a month can add up, as the research revealed. Based on an average mortgage of £195,000 (unspecified term), a homeowner could save a total of nearly £7,000 in interest and cut their loan by one year and 10 months by paying £50 extra per month. 

Thousands of homeowners could be tapping into these benefits, but a third of the people not making overpayments say they are being held back due to ‘friction or a lack of understanding’ about the impact. 

With some mortgages now lasting up to 40 years, 69% of first-time buyers are keen to reduce their debt, term or interest. Although overpayments could help them achieve this goal, it’s important to consider other financial commitments. We can help you determine if mortgage overpayments may be suitable for you. 

¹Monzo, 2025 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments. Financial protection policies typically have no cash-in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.