Read our expert guide to Mortgage Overpayments to families in 2026 and find out how they can help you to save thousands on your mortgage repayments.
Should I make Mortgage Overpayments in 2026?
Millions of families are constantly faced with the dilemma of whether to save or make overpayments on their mortgage. This is a monthly or yearly question for lots of mortgage borrowers who are in a fortunate position to be able to overpay their mortgage.
The current issue with mortgages is the obvious fact that interest rates are higher which means that you will naturally pay more than you would have done several years ago. Previously, mortgage overpayments weren’t as common because borrowers were only paying a fraction of the interest that they are paying now.
WARNING: It is very important to think very carefully about your financial situation before you make any overpayments on your mortgage and ideally you should have a rainy day fund. It’s important for parents to have proper financial protection for loss of income and serious illness or worse.
If you have disposable income then you should really be thinking about whether it is worth overpaying your mortgage. Even a relatively small overpayment can save you thousands over the term of your loan, especially if your mortgage rate is high.
Average 2 year and 5 year fixed rate mortgage
| Deal period | Current average rate | Weekly difference | Annual difference |
|---|---|---|---|
| 2 Year Fixed | 5.08% | -0.11% | +0.55% |
| 5 Year Fixed | 5.07% | -0.11% | +0.55% |
Our expert guide to mortgage overpayments looks at when you should really think about it and how much money it can save you. We’ll explain how to make mortgage overpayments and answer the most common questions that mortgage borrowers ask.
60 Second Summary – Should I make mortgage overpayments?
In recent years, more households are considering mortgage overpayments to reduce their mortgage terms and save money in interest charges. There are some very simple rules to follow when thinking about making mortgage overpayments and ultimately what it can save you in interest charges. Mortgage overpayments can save borrowers and homeowners thousands in interest charges, plus it will pay off your mortgage quicker.
- Most mortgage lenders and mortgage loans will allow you to overpay your mortgage by 10% per year without any extra charges.
- Mortgage borrowers can overpay their mortgage at any point during the year or you can pay your annual allowance in one lump sum.
- When considering overpaying your mortgage, you should think carefully about whether your family can afford it and whether you have any other credit commitments that are better to pay off (e.g. Credit Cards, Loans, etc.).
- Speak to a qualified mortgage specialist or your mortgage lender if you are unsure about how or when to make mortgage overpayments.
What is a mortgage overpayment?
A mortgage overpayment is when a mortgage borrower pays more than their monthly or yearly mortgage repayment. Mortgage lenders will all offer a facility for a mortgage account holder to pay more than the typical repayment.
Overpayments are simply anything extra that you decide to repay to your mortgage lender either monthly or annually. Some mortgage borrowers pay an extra sum each month to reduce their mortgage balance, or you can pay a one-off payment each year if you prefer.
Note: According to official figures from Santander, its mortgage customers made over £100 million in mortgage overpayments in the first week of 2025. Santander also told us that its mortgage borrowers repaid more than £2 billion in 2024 in mortgage overpayments.
Is it a good idea to make mortgage overpayments?
Generally, it is a good idea to overpay your mortgage, as long as it is affordable and you don’t have other higher interest credit commitments to repay (e.g. credit cards, store cards, loans, other finance agreements). If you are in a financial position to be able to pay off your credit agreements, then you just need to prioritise which ones are best to repay first.
Simple rules for making mortgage overpayments
1. Should I repay other credit commitments?
If you have other commitments with higher interest rates, then you should ideally pay those off before you make mortgage overpayments to reduce any other interest charges (only do this where it is possible and there are no penalties for repaying the credit facility).
2. Should I put my money in to savings?
If and when you can get a better rate on savings, then you would be better off putting your money in to this. Generally, this isn’t going to be the case at the moment and especially when mortgage rates are as high as they are.
3. Can I afford to make mortgage overpayments?
Think very carefully about the short term and long term financial impact on your family if you pay more money to your mortgage. You should only do this if your family can afford to spare this money and it won’t have any impact on your lifestyle if anything happened to you or your partner.
There are other things to think about that might be specific to your family and your financial situation, but these are just a good place to start to get you thinking about the right thing.
Pros
- Can save you and your family thousands in interest payments which is usually the highest cost of owning a home.
- Will pay your mortgage off sooner and then your family home could be mortgage free sooner.
- Interest rates are lower when it comes to remortgaging because your loan to value can be lower.
- Mortgage overpayments are often better value for families than putting money in to savings.
Cons
- Mortgage overpayments will mean that your spare money will be gone and you can’t get it back without remortgaging.
- It can be wasted you don’t tell your mortgage lender that you want to ‘reduce your mortgage term’.
- You might have to pay a fee or a charge on some mortgage overpayments, so check with your lender.
- If a financial emergency happens in your family (e.g. redundancy, illness, or death) then you need to have cover for this.
How can I make a mortgage overpayment?
When you’ve done your sums and you know that you want to make mortgage overpayments, then you can go ahead and contact your lender. The first and most important point is to speak to your mortgage lender to tell them that you want to make overpayments and make sure that it’s done right.
Things to say to your mortgage lender about mortgage overpayments.
There are some very important things to talk to you mortgage lender about to make sure that your mortgage overpayments are set up right and you don’t lose money.
- You are making overpayments to ‘reduce your mortgage term’.
- Are there any charges or fees for making mortgage overpayments?
- What options do you offer for making mortgage overpayments?
Mortgage lenders will usually offer a facility for you to make monthly or yearly mortgage overpayments. There are several simple steps that you should follow to make regular or one-off overpayments on your mortgage.
Step by Step guide to Mortgage Overpayments
Step 1. Contact your Mortgage Lender
Contact your mortgage lender to tell them that you want to make a mortgage overpayment and ask if there are any charges for doing this (e.g. Early Repayment Charges).
Step 2. Set up your Payment Option.
For regular mortgage overpayments (e.g. monthly), you can arrange with your lender to set up a direct debit or increase your mortgage repayment online (depending on what facility the lender offers).
Step 3. Confirm Mortgage Overpayments with your lender.
It’s also good practice to speak to your mortgage lender to make sure that the mortgage overpayments have been received and that your mortgage balance is reducing.
Most mortgage lenders offer various options to borrowers to help them to make mortgage overpayments. These facilities will depend on the lender and how they are set up for online banking and other digital services, obviously bigger lenders will have more options than smaller lenders or building societies.
WARNING: you MUST tell your mortgage lender that you want to make mortgage overpayments to reduce your mortgage term. If you don’t tell your lender this then it can mean that your mortgage overpayments would be fairly pointless.
How much will I save with mortgage overpayments?
As long as you do it the right way, mortgage overpayments can save you thousands in interest over the term of your mortgage. Even a relatively small overpayment will significantly cut the amount of interest that you will pay on your mortgage.
It is also highly likely that mortgage overpayments will save you more than you would make by paying money in to a savings account.
We’ve put together some examples of mortgage overpayments in the table below to show you how it looks in reality, and it really doesn’t need to be big payments. Our table also shows you how much you would save against a typical savings rate of 2.59% and a mortgage interest rate of 4.8%.
| Monthly mortgage overpayments | Reduction of Mortgage Term | *Total Amount of Interest Saving (£’s) | **Overpayments v Savings Account |
|---|---|---|---|
| £10 | 5 Months | £2,730 | £1,490 (better off) |
| £50 | 2 Years | £12,560 | £6,250 (better off) |
| £100 | 3 Year 9 Months | £22,830 | £10,180 (better off) |
| £500 | 11 Years 6 Months | £66,740 | £16,630 (better off) |
| £1,000 | 15 Years 8 Months | £88,410 | £14,140 (better off) |
*Based on a £185,000 mortgage with a term of 25 years and an interest rate of 4.8% which is the average fixed rate (https://www.finder.com/uk/mortgages/mortgage-statistics).
** Based on a typical instant access savings rate of 2.59% according to https://www.finder.com/uk/savings-accounts/inflation-vs-savings.
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What is the 10% mortgage overpayments rule?
Most mortgage lenders will allow borrowers to repay up to 10% of the remaining mortgage balance in 12 months without any penalty (e.g. Early Repayment Charge). We should also stress that this rule only applies during a Fixed or Discount rate period, and after that you are usually free to pay off as much as you like.
You should ALWAYS check your mortgage documents or speak to your lender to confirm that you have a ‘10% overpayments clause’ with your loan. There are some lenders or specific deals that either don’t have this or they might have a different percentage allowance.
The majority of families and mortgage borrowers won’t be able to repay more than 10% of their mortgage balance in 12 months in reality. This rule was set several years ago and has not changed since then, especially as more mortgage lenders have adopted the same strategy.
There are some circumstances where you may want to repay a lump sum off your mortgage, such as:
- Inheritance
- Selling another property, business, or asset
- Windfall
- Investment maturing
If one of these things happens to your family, then you might want to think about whether you make a mortgage overpayment, or wait until the end of your mortgage deal.
Note: your 10% will usually be calculated based on your mortgage balance at the beginning of that repayment year. For example, if your mortgage balance was £150,000 at the start of the year, then you would be able to repay an extra £15,000 in that year without a penalty or charge.
What happens if I want to repay more than 10% mortgage overpayment?
If your mortgage has a limit of 10% for mortgage overpayments and you still want to pay more than this, then you will usually have an Early Repayment Charge (ERC) to pay. This will typically be between 1% and 4% of the amount over your 10% allowance that you are paying to your mortgage lender.
You will be able to find your Early Repayment Charge on your mortgage documentation or you can contact your mortgage lender to find this out. The table below shows an example of a potential penalty for repaying more than your 10% allowance.
| Early Repayment Charge (%) | 1% | 2% | 3% | 4% |
|---|---|---|---|---|
| Lender Fee (£s)* | £200 | £400 | £600 | £800 |
*based on a mortgage balance of £200,000 and a mortgage overpayment of £40,000 (maximum allowed would be £20,000 under 10% rule).
How do mortgage overpayments help with remortgaging?
Mortgage overpayments can also be a big advantage to mortgage borrowers and families when the time comes to remortgage. Your mortgage balance will reduce when you make overpayments and this also means that the equity in your home will increase, which is a benefit when it comes to remortgaging.
By increasing the amount of equity in your home, you will automatically reduce the loan to value (LTV) ratio for your remortgage. If you manage to reduce enough to take your mortgage down by a 5% or 10% bracket, then your mortgage interest rate on your new mortgage will usually be lower.
Mortgage lenders will charge a certain rate for remortgage or new mortgage customers depending on the amount of equity they have. This will usually go down in 5% or 10% increments which will usually mean that your interest rate on a fixed or discount rate deal will also be lower.
Loan to value brackets for mortgages
Below is a table showing the various levels of loan to values that mortgage lenders offer and some examples of the average fixed mortgage rate.
Average 2 year and 5 year fixed-rate mortgages (low loan-to-value)
The lowest 2 year and 5-year fixed-rate mortgages are at 60%, which is considered to be the best value for money for borrowers with deposits over 40%.
| Deal period | Loan to Value | Current average rate | Weekly difference | Annual difference |
|---|---|---|---|---|
| 2 Year Fixed | 60% | 4.61% | +0.16% | +0.71% |
| 5 Year Fixed | 60% | 4.63% | +0.16% | +0.61% |
Average 2 year and 5 year fixed rate mortgages (Standard loan to value)
Most mortgage borrowers have between 15% and 25% deposits or equity, the table below shows the average 2 year and 5 year fixed rates for these loan to value mortgages.
| Deal period | Loan to Value | Current average rate | Weekly difference | Annual difference |
|---|---|---|---|---|
| 2 Year Fixed | 85% | 5.13% | -0.07% | +0.48% |
| 5 Year Fixed | 85% | 5.13% | -0.11% | +0.54% |
| 2 Year Fixed | 75% | 5.04% | -0.09% | +0.59% |
| 5 Year Fixed | 75% | 5.05% | -0.10% | +0.62% |
Average 2 year and 5 year fixed rate mortgages (High loan to value)
The table below show the average 2 year and 5 year fixed rate mortgages for customers with a 5% and a 10% deposit.
| Deal period | Loan to Value | Current average rate | Weekly difference | Annual difference |
|---|---|---|---|---|
| 2 Year Fixed | 95% | 5.88% | -0.09% | +0.46% |
| 5 Year Fixed | 95% | 5.78% | -0.14% | +0.48% |
| 2 Year Fixed | 90% | 5.40% | -0.07% | +0.42% |
| 5 Year Fixed | 90% | 5.33% | -0.08% | +0.51% |
*Updated on 6th February 2025: These rates are provided by Podium and quoted on https://www.rightmove.co.uk/news/articles/property-news/current-uk-mortgage-rates/ based on 95% of the mortgage market with a lender fee of £999.
Note: you should also consider this when you’re calculating the potential savings that you can make from any mortgage overpayments.
How can I get help with my mortgage?
For more information about mortgage overpayments or help you’re your families mortgage then you can contact one of our qualified mortgage experts. It’s important to get proper advice from a mortgage specialist who can explain how this and other factors might impact your new or remortgage application.
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