Lump Sum Overpayment Savings Calculator

A 5,000 lump overpayment on a 200,000 mortgage at 4% with 20 years remaining saves roughly 5,965 in interest over the remaining term. That's a 119% return on the overpayment — equivalent to earning that rate on savings, but with no investment risk. It's one of the highest-return decisions most borrowers can make.

What the result means

Primary is interest saved — the pure financial gain from overpaying. Secondary shows effective return on the overpayment, total interest on the new balance, and interest on the old balance.

Overpayment vs invest

The overpayment is effectively a illustrative returns equal to the mortgage rate. Compare to what you'd earn on savings or investments after tax. For most people, overpaying a mortgage at 4-5% is comparable to or better than equity returns after fees and tax — and has zero volatility.

Run it with sensible defaults

Using outstanding balance of 200,000, lump sum overpayment of 5,000, interest rate of 4%, years remaining of 20 years, the calculation works out to 5,964.70. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Outstanding Balance, Lump Sum Overpayment, Interest Rate, and Years Remaining — do not pull with equal force. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

How the math works

Compares total interest on the original schedule vs a new schedule with the overpayment applied and the same monthly payment maintained. Uses standard amortisation for both. Does not account for overpayment fees (some mortgages cap overpayments at 10% of balance per year).

Stress-testing the plan

Run the calculation at your current rate, then run it again at a rate 2–3 percentage points higher. That's roughly what a product reset could bring at renewal, and it's a useful check on whether you can afford the mortgage in a higher-rate world, not just today's.

What this doesn't capture

The figure excludes arrangement fees, valuation costs, legal fees, insurance, and any early-repayment charges — those can add several thousand to the headline cost. Rate changes at renewal for fixed-term deals will shift the picture further. Use this for the core interest/principal math and add the other costs on top.