Overpayment
The 10% overpayment rule, explained
A fixed rate locks your interest, but it does not lock you out of paying your mortgage down faster. Most deals come with a free overpayment allowance, and used well it can knock years off the loan. Used carelessly, it can tip you into an early repayment charge. Here is how the rule actually works.
The basic rule
Most fixed mortgages let you overpay 10% of the balance each year without any early repayment charge. Overpay above that while the fix runs and the charge applies to the excess. The 10% is the common figure, but it is not universal, so the number that matters is the one written in your own mortgage offer.
Three details that trip people up
The allowance resets on a date. For some lenders that is your deal anniversary; for others it is 1 January. Knowing which one yours uses tells you when a fresh 10% becomes available.
What you do not use is gone. The allowance does not roll over. If you can only spare money near the end of the year, it can be worth waiting a few weeks for the reset so a large overpayment falls into the new year's allowance instead of breaching the old one.
The 10% is usually measured against the balance at the start of that year, not a running figure. Again, your offer is the place to confirm it.
What overpaying actually saves
Overpaying works because it cuts the balance that interest is charged on, every month, for the rest of the loan. On a £200,000 mortgage at 4.5% over 25 years, paying an extra £200 a month clears it several years early and saves tens of thousands in interest over the life of the loan. The earlier in the term you do it, the more it saves, because the money has longer to work.
One thing to settle first: most lenders keep your monthly payment the same and shorten the term when you overpay, which saves the most interest. Some let you lower the payment instead. Ask which your lender does before you start.
Overpay, or save the money?
Overpaying is not always the best home for spare cash. If your savings earn more after tax than your mortgage rate, saving can win. If you have expensive debt elsewhere, that usually comes first. And keeping an emergency buffer matters more than shaving a little interest. This is a personal call, and a financial adviser can help you weigh it.
See the effect on your own mortgage
To see how much headroom you have left this year under your own lender's published rule — and the date it resets — use the overpayment allowance calculator; it runs in your browser and stores nothing.
The clearest way to understand overpaying is to watch your own balance curve bend. Our free timeline has a slider: move it, and the chart, your mortgage-free date and the interest saved all update from your figures, including a warning if you would cross your yearly allowance. If you are deciding between overpaying and switching deals, see also should you break your fix early.
Frequently asked questions
How much can I overpay on a fixed-rate mortgage?
Most fixed deals let you overpay 10% of the balance each year with no early repayment charge. The exact percentage and how it is measured are set in your mortgage offer, so check yours.
When does the 10% overpayment allowance reset?
On a date set by your lender. For some it is your deal anniversary, for others it is 1 January. Whatever you do not use does not roll over to the next year.
Does overpaying reduce my term or my monthly payment?
By default most lenders keep your payment the same and shorten the term, which saves the most interest. Some let you choose to lower the payment instead. Ask your lender which applies before you overpay.
Try the overpayment slider
Put in your mortgage on the free timeline and drag the slider to see what an extra £50, £200 or £500 a month does to your finish date and your total interest. Nothing stored.
Examples are illustrative and rounded. Your own mortgage offer and lender confirm your actual figures and dates. This is information, not financial advice. For advice on your circumstances, speak to a mortgage adviser regulated by the FCA.