With mortgage rates at 5%+ for many borrowers, overpaying your mortgage is one of the most powerful financial moves you can make in 2026. Here's exactly how the maths works — and whether it beats putting money in savings. Updated April 2026

Overpayment Savings: How Much Could You Save?

These figures are illustrative estimates based on a 20-year remaining term. Your actual savings depend on your exact balance, rate, and remaining term.

The 10% Overpayment Rule

Most UK mortgage lenders — including Nationwide, Barclays, HSBC, Halifax and Santander — allow you to overpay up to 10% of your outstanding mortgage balance each year without penalty. So if your outstanding mortgage is £200,000, you can overpay up to £20,000 per year (around £1,667/month) without triggering an Early Repayment Charge.

Exceeding 10% typically triggers an ERC of 1-5% of the overpayment amount. Always check your specific mortgage terms before overpaying significantly.

Overpay Mortgage vs Save in a Savings Account?

For most borrowers in April 2026 with mortgage rates above 5%, overpaying the mortgage gives a guaranteed, tax-free return that beats most savings accounts. However, if you have a cheap fix from 2021-22 at 1-2%, your money works harder in a 4.75% savings account.

How to Make an Overpayment

Most lenders let you overpay via online banking, by calling your lender, or by increasing your direct debit. Always specify the overpayment is to 'reduce your term' not 'reduce your monthly payment' — unless you specifically want lower monthly payments rather than paying off sooner.

This article is for informational purposes only and does not constitute financial advice. Mortgage rates change daily. Always consult a qualified mortgage broker before making decisions. Your home may be repossessed if you do not keep up repayments.