Homeowners across the UK could collectively shave £2.3bn off their annual mortgage interest bills simply by making overpayments, but many are hesitant to get started.
£195k mortgage + £50 overpayment per month = £7k saving on interest
If a homeowner with a £195,000 mortgage contributes just £50 extra per month, they could save nearly £7,000 in interest and cut their mortgage term by one year and 10 months, according to research.
Overpaying reduces the total interest you’ll pay over time.
Recent research shows that, while overpayments worth a combined £5.3bn could potentially be made each year, 40% of homeowners admit they don’t feel confident enough to take that first step. Currently, only one in three mortgage holders is making overpayments.
Making overpayments work for you
Most mortgage lenders allow overpayments of up to 10% of your outstanding balance each year without applying any charges. Overpaying not only reduces the total interest you’ll pay over time but also shortens the length of your mortgage.
Whether it’s a lump sum or a modest monthly amount, even small overpayments can have a meaningful impact.
Many homeowners are missing out on these potential savings, with a third of non-overpaying homeowners citing ‘friction or lack of understanding’ as the reason for holding back. This is particularly relevant given the trend toward longer mortgage terms, some stretching up to 40 years.
With 69% of first-time buyers expressing a desire to reduce their interest, debt, or mortgage term, overpayments could be a practical strategy to consider. However, it’s essential to weigh this decision against your broader financial priorities.
🚨 Data accurate as of the date of publication
🚨 The above material is for informational purposes only and does not constitute a sales offer or financial advice. Before taking out any insurance, credit agreement or other financial product, you should obtain individual advice on your requirements and the general terms of the contract.
Source: Quilter Financial Planning – Essentially Mortgages Q3 2025
