Should I Overpay My Mortgage or Invest? Calculator
Enter your mortgage and the extra amount you have each month to see whether overpaying or investing comes out ahead.
| Overpay | Invest | |
|---|---|---|
| Mortgage paid off after | 16 years 11 months | 25 years |
| Mortgage interest paid | £85,792 | £133,499 |
| Investments at the end | £169,477 | £178,653 |
With overpaying, once the mortgage is cleared the whole payment (£1,412 a month) is invested for the rest of the term, so both routes use the same money. Interest saved by overpaying is guaranteed, investment returns are not and can fall as well as rise. Check your mortgage for early repayment charges and yearly overpayment limits (often 10% of the balance).
The question in one line
Overpaying earns you a guaranteed return equal to your mortgage rate (by cutting the interest you pay). Investing might earn more, but it is not guaranteed and can fall in value. This calculator shows both outcomes so you can see the trade-off.
Example: with a £200,000 mortgage at 4.5% over 25 years and £300 extra a month, overpaying clears the mortgage 8 years early and saves £47,708 in interest. If investments grow at 5% a year, investing ends £9,176 ahead.
How to read the result
- If investment growth is higher than your mortgage rate, investing tends to come out ahead, but with more risk.
- If your mortgage rate is higher than the growth you can realistically expect, overpaying wins.
- When the mortgage is cleared, the freed-up payment is invested, so both routes use the same money.
Before you overpay
- Most deals let you overpay up to 10% of the balance a year without a penalty. Above that, early repayment charges can apply.
- Build an emergency fund first. Money in your mortgage is hard to get back out.
- If you are on a tracker or variable rate, the interest you save changes when rates change.
- Get any employer pension match before overpaying, because it is free money.
To see how overpaying changes the mortgage, use the mortgage overpayment calculator.
Frequently asked questions
Is it better to overpay my mortgage or invest?
It depends on your mortgage rate, the return you expect from investing, and how much risk you can accept. Overpaying is a guaranteed return equal to your mortgage rate; investing may earn more but can lose money.
How much can I overpay without penalty?
Many lenders allow up to 10% of the outstanding balance each year. Check your mortgage terms.
Should I use savings to overpay?
Keep an emergency fund of a few months of expenses first. Money overpaid into a mortgage is hard to get back.
Does overpaying shorten the term or lower the payment?
That depends on your lender. Many shorten the term, which saves the most interest. You can ask for the payment to be reduced instead.
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Figures are for the 2026/27 tax year from official sources and are estimates for guidance only, not financial or legal advice. Printed from ukanswers.co.uk.