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Mortgage overpayments

ended 02. July 2026

What % of people in your experience regularly make overpayments to their mortgage and should more people do so? Given that even small overpayments can have a big ripple effect, do too few people take advantage of this facility? Do you actively advise people to do so and should there be more education about the benefits of overpaying?   

9 responses from the Newspage community

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Ben Perks
Managing Director at Orchard Financial Advisers
I’d guess that less that 25% of borrowers overpay. It is such an underused strategy. Overpayments kick the backside out of mortgages, they can knock years off the mortgage term and save thousands in interest.
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Martin Rayner
Financial Adviser at Compton Financial Services
In my experience, most borrowers are not making regular mortgage overpayments.

The bigger question, though, is whether overpaying is the best use of your spare money. I do not automatically recommend it. We compare it against pensions and other investments first. Paying down a 4% mortgage gives you a guaranteed 4% return, but many higher earners can achieve a much better outcome through pension contributions.

A higher-rate taxpayer can receive 66% effective tax relief, while someone caught in the £100,000 to £125,140 personal allowance trap can receive effective relief of up to 150%. Put simply, £40 of take-home pay can become £100 in a pension.

Mortgage overpayments are a fantastic tool in the right circumstances, but they should be weighed against pensions, ISAs and other financial priorities rather than being treated as the default home for every spare pound.
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Tracey Dixon
Buy-to-Let Mortgage Specialist & Owner at Pure Mortgage and Protection
Many borrowers don't realise that overpaying doesn't have to mean paying hundreds of pounds extra each month. Even a small regular overpayment can reduce the overall interest paid and, in many cases, shorten the mortgage term.

That said, overpayments aren't suitable for everyone. Before making them, borrowers should check their mortgage allows penalty-free overpayments and ensure they have an emergency fund in place. While many lenders permit overpayments of up to 10% of the outstanding balance each year, the rules can vary between products.

I always discuss overpayments with my clients because, where they're affordable, they're one of the simplest ways to reduce the long-term cost of a mortgage. I do think there should be greater awareness of this, as many people are surprised by the impact that even an additional £50 per month can make over the life of their mortgage.
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Aaron Strutt
Product and Communications Director at Trinity Financial
For many borrowers overpaying their mortgage is one of the most attractive and rewarding things to do to improve their finances. For others, they think it is a terrible idea because they can get better returns elsewhere. Every extra pound you overpay typically goes directly towards reducing the loan balance, which means less interest paid to the lender and a shorter mortgage term. Mortgage overpayments can be highly effective and well worth doing to get the debt repaid sooner. According to research by Monzo Bank UK, homeowners could collectively save £2.3bn on mortgage interest each year by making overpayments, but they need help to make the first move. Many homeowners like the idea of making overpayments, but they would rather still have access to their cash in the event of a financial emergency. It seems like a good idea to make overpayments on your mortgage when you can, especially if you have an interest-only mortgage, while also boosting your savings or investments.
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Peter Dockar
Chief Commercial Officer at Gen H (Generation Home)
Our own data shows around 6–7% of Gen H accounts make an overpayment in any given month, which is in keeping with the industry average. This includes recurring overpayments of smaller amounts of a couple hundred pounds per month and one-time lump sums from owner inheritances or gifts, which are typically £100,000+. Though even modest overpayments can save an owner thousands over the life of the mortgage, deciding to overpay isn't always an obvious choice. Overpayments are a guaranteed, tax-free return equal to the mortgage rate, and they reduce the LTV faster, which can secure much cheaper rates at remortgage. But borrowers may be able to earn more with high return savings accounts or by investing in their pensions, so it's not necessarily an appropriate tool for everyone. This is where advisers play an integral role in helping owners plan how to use their money today to build a secure, comfortable tomorrow.
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Richard Davidson
Mortgage Advisor at onlinemortgageadvisor.co.uk
From what we see, only a small minority of borrowers overpay regularly, but that share climbs noticeably as people get within sight of the end of their term and the finish line comes into view. Plenty like the principle of overpaying, yet actually managing your mortgage month to month is easier said than done, and that is where most of the opportunity quietly gets missed.

Small, regular overpayments really do add up and can take years off a term, so yes, I encourage clients to look at them. The honest caveat is that overpaying always has to be weighed against the opportunity cost of saving or investing instead, and with savings rates where they have been over recent years, some people are genuinely better off keeping that money elsewhere, so the education people actually need is about making that choice for themselves rather than simply being told to overpay.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
For some people it can make sense but there are definitely situations where it doesn't.

We have clients who still benefit from mortgage rates starting with a 1! For them, the money that they could overpay is often better placed sitting in a savings account earning 3 or 4 times that.

We also have other clients, who have money in savings accounts earning 4.5pc. They are higher rate tax payers so only reallt get about 2.5pc in their pocket after tax.

If they're paying 4.5pc on their mortgage then this makes overpaying the mortgage a slam dunk victory.

As ever though, each situation is different, and keeping a certain amount in liquid cash is important. It's not as easy as some people may think to pull money back out after overpaying a mortgage. This is why we're seeing an increased interest in offset moetgages.

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Evren Ergin
Founder And Developer at ValuQ
Too few, and the reason is the mistake that comes before the mortgage: people buy at the very top of what they can borrow, then have nothing left to overpay with, and panic when their fix ends and the rate resets higher.

I did the opposite with my first flat. I bought well below what the bank would have lent me and overpaid for three years. The point was never just to clear the mortgage faster. It was breathing room. I could take my family out for dinner, and I did not have a heart attack when the car needed new tyres at the end of the month.

That is what overpaying really buys: not just less interest, but resilience. In a flat market where the house is not building your equity for you, the only equity you reliably gain is what you pay down.

So yes, more people should, and yes, we badly need to teach it. But the first lesson is to borrow less than you are offered, because you cannot overpay a mortgage that already owns you.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Sadly, only a small percentage of clients use the overpayment facility within their mortgage. Many people mistakenly think that overpayments have to be lump sums, so are surprised when I tell them that most lenders will allow them to amend their monthly direct debit; so rather than pay your lender £856.89 per month, just ask them to increase that to £860, or £900, even those quite modest overpayments will make a difference to your mortgage term and, ultimately, the total amount of interest you pay. The vast majority of lenders charge interest daily, so by making regular overpayments is more effective than saving up and then paying the same amount as a lump sum. Whilst many lenders cap the amount you can overpay it is generally 10% of the mortgage balance each year, a few will allow 20%. You can also find specific deals with some lenders that have no limit on the overpayments, or offset mortgages which can offer similar benefits to overpaying without losing access to savings.