Mortgage Overpayment Calculator
See how recurring or one-time overpayments could cut your mortgage interest and payoff time — under both treatments: shorten the term or reduce the payment.
- Free
- No signup
- Private browser calculation
Estimated interest saved (shorten-term treatment)
₹39,435
Baseline: ₹1,979.87/month, ₹1,75,168 remaining interest, 20 years to payoff.
- Shorten the term — interest saved
- ₹39,435
- Shorten the term — time saved
- 4 years
- Shorten the term — total extra paid
- ₹57,300
- Reduce the payment — interest saved
- ₹20,038
- Reduce the payment — time saved
- 1 month
- Reduce the payment — revised payment
- ₹298.91
Shortening the term produces the larger estimated interest saving under these assumptions — about ₹39,435, finishing 4 years early with your payment unchanged.
Reducing the payment instead keeps the original end date, lowers the required payment to about ₹298.91, and saves about ₹20,038 of interest.
These estimates are for general planning only and are not mortgage approval, lending, tax, legal or financial advice. Actual rates, fees, taxes, insurance costs and lender decisions may differ.
Assumptions and conventions
- Per-period rate = nominal annual rate ÷ payments per year (standard quoted-rate convention). Reducing-balance method.
- The rate stays fixed for the remaining term; overpayments reduce principal immediately.
- Shorten-term keeps your payment unchanged; reduce-payment recalculates it after each overpayment so the end date holds.
- Any annual limit caps total extra payments in each 12-month block; charges are paid separately.
- Whether these treatments are available, and on what terms, depends on your mortgage contract.
- Values are calculated at full precision and rounded for display; columns may differ from totals by a small rounding amount.
What this calculator does
It rebuilds your remaining mortgage schedule twice: once as it stands, and once with your planned overpayments — a recurring extra amount, a one-time lump sum, or both. The difference is the estimated interest saved and time saved.
It shows both standard treatments side by side. Shortening the term keeps your payment unchanged, ends the loan earlier, and produces the larger interest saving. Reducing the payment keeps the original end date and lowers the required payment after each overpayment, improving monthly cash flow but saving less interest. Neither is universally better — it depends on whether you value the saving or the cash flow.
Charges and limits
Some lenders cap penalty-free overpayments (commonly a percentage of the balance per year) or charge a fee on amounts overpaid. Enter your own limit and charge if they apply — the calculator caps overpayments at your limit and subtracts charges from the net saving. It does not know your mortgage contract; check your lender's terms.
Formula
Each period: interest = balance × per-period rate; principal = payment − interest + overpayment. In shorten-term mode the payment never changes, so extra principal ends the loan sooner. In reduce-payment mode the required payment is recalculated after each overpayment as balance × i ÷ (1 − (1 + i)⁻ᵐ) over the m remaining scheduled payments.
Interest saved = baseline total interest − overpayment-scenario total interest. Net saving subtracts any overpayment charge (charge % × amounts overpaid).
Assumptions
- The interest rate stays fixed for the remaining term.
- Overpayments are applied to principal in the period they are made, with no delay.
- The annual overpayment limit, if entered, caps total extra payments in each 12-month block of the schedule.
- Any overpayment charge is paid separately and is not added to the balance.
- Per-period rate follows the selected country's convention (shown in the assumptions panel).
Content and formulas reviewed on 2026-08-06. See our methodology for how calculations are built and tested.
Worked example
A 300,000 balance at 5% with 20 years remaining has a required payment of about 1,980 a month and about 175,200 of remaining interest.
Overpaying 300 a month and keeping the payment unchanged clears the loan roughly 3 years 9 months early and saves roughly 33,000 of interest. Choosing reduce-payment instead keeps the 20-year end date, gradually lowers the required payment, and saves noticeably less interest — the calculator shows both, computed from your actual figures.
Frequently asked questions
Is it better to reduce the term or the monthly payment?
Shortening the term produces the larger estimated interest saving under these assumptions, because the balance falls faster for longer. Reducing the payment improves monthly cash flow instead. The right choice depends on your budget and goals — this calculator quantifies both so you can decide.
Can my lender charge an overpayment penalty?
Some can, especially during fixed or introductory periods — commonly a percentage of the amount overpaid above an annual allowance. Enter your lender's charge and limit in the optional fields; the calculator cannot know your contract terms.
Does an overpayment always reduce interest?
On a reducing-balance mortgage, yes — every unit of principal repaid early stops accruing interest for the rest of the term. The saving shrinks if a charge applies or if the overpayment comes late in the term when little interest remains.
Do earlier overpayments save more?
Yes. An overpayment made in year 2 avoids interest for the remaining decades; the same amount in the final years avoids very little. That is why lump sums early in the term have an outsized effect.
What if my overpayment clears the mortgage?
The schedule simply ends at that payment: the final overpayment is capped at the remaining balance, and the calculator reports the earlier payoff date and the full interest saving.
These estimates are for general information only and are not financial, tax, legal, or investment advice. Rates, fees, and lending rules vary by lender and country. Actual costs and outcomes may differ from the projections shown.