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Is it worth overpaying your mortgage?

Making additional payments towards your mortgage has many benefits, including the possibility of being mortgage free sooner.

Known as a mortgage overpayment, this additional amount is paid on top of your regular monthly repayments.

Overpaying your mortgage could cut the amount of interest you pay, as the additional payments will reduce your outstanding mortgage balance.

Find out how mortgage overpayments work and the potential benefits. We’ll also take you through the things you’ll need to consider before paying extra on your mortgage.

How does overpaying on your mortgage work?

When overpaying on your mortgage, you have a few different options. The right one for you will depend on how you want to overpay and how much extra you’d like to pay.

For example, if you’ve received an inheritance or a redundancy payment, you may want to make a one-off overpayment. Or perhaps you’ve had a salary increase. In that case, it may suit you better to make regular additional payments every month.

Most lenders allow you to set this up in their mobile banking app. If it's not available, give your lender a call to find out how you can do it.

If you’re on a fixed rate or tracker mortgage with NatWest, you can overpay by up to 20% for each of your sub-accounts. Any more than this, and you’ll be charged an Early Repayment Charge (ERC).

Not all mortgages have limits and ERCs. For example, you can overpay as much as you want if you're on a Standard Variable Rate (SVR).

You also don’t have to commit to making regular overpayments. It’s completely flexible how much and how often you want to overpay, provided you stay within any annual limits. 

What are the benefits of overpaying your mortgage?

Mortgages are typically set up to run for a fixed period. Your monthly repayments are based on:



There are a number of potential benefits of overpaying on your mortgage. These include:

Becoming mortgage free sooner.

You can reduce the balance of your loan and potentially pay off your mortgage sooner. 

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Lowering the amount of interest you pay.

By paying your mortgage off quicker, you could pay less interest and reduce the amount owed. 

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Your interest being charged on a lower amount.

As your outstanding balance will be lower, any future interest will be applied to a smaller amount. This means you could make smaller repayments.

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Reducing your LTV. 

The more capital you pay off, the lower your loan-to-value (LTV) will be. This can help increase your equity and could allow you to access more competitive mortgage rates.

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Are there downsides to mortgage overpayments?

There are many advantages of overpaying on your mortgage. But there are things to consider before deciding on whether you should overpay your mortgage.

One of the most common downsides is early repayment charges (ERCs). Depending on your mortgage deal, you may incur a fee for paying extra on your mortgage. This tends to range between 1% and 5% of the amount overpaid.

However, most lenders usually allow you to pay off a certain amount per year before you are charged an ERC. With NatWest, you can pay up to 20% of the outstanding balance on each of your sub-accounts before an ERC will apply.

Using spare cash to make mortgage overpayments also means you won’t be able to use this cash elsewhere. So take the time to weigh up your current financial situation and consider any other debt you may have.

What impact can overpaying have?

Online overpayment calculators can help show how even small overpayments can reduce your total owed balance. You can also experiment with the length of your loan to see the total amount of interest you’re charged.

Here's an example using the NatWest overpayment calculator:


Overpayment amount

Total mortgage

Mortgage term

Interest rate

Savings on interest

Term reduction

£50 (extra monthly payment)


20 years



18 months

£100 (extra monthly payment)


20 years



2 years 10 months

£10,000 (one-off payment)


20 years



1 year 11 months

Calculations based on the interest rate remaining at 4% for the full 20 years.


There are many reasons why people may want to overpay on their mortgage. Some borrowers consider overpayments so they can reduce the length of their mortgage to bring it in line with life events. For example, retirement or children going to university, when the extra money might be especially useful. Others may overpay to reduce their overall interest bill.

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Is it better to save or overpay on your mortgage?

It may be difficult to decide whether you should save or overpay on your mortgage. Both options can have their benefits, but the best decision for you will depend on your financial goals.

If your mortgage rate is similar or higher than your savings rate, overpaying can be beneficial.

Considering the current financial climate can help you make your decision. For example, if interest levels on saving deposit accounts are low, using spare cash to pay extra on your mortgage may make more sense.

However, savings aren’t the only alternative to mortgage overpayments. It might make sense to prioritise pension pots or long-term investments. That’s why it’s important to consider your financial goals and situation, alongside the current financial climate

Mortgage overpayments: FAQs