Overpaying Before or After Your Fixed Rate Ends?
This guide is for general information only and does not provide financial advice. Check your lender’s terms before overpaying, as early repayment charges may apply. Your home may be repossessed if you do not keep up repayments on your mortgage.
Lenders’ terms differ. A deal may set a yearly allowance and a charge for going over it, and what applies once the deal period ends depends on your lender. So a large overpayment can raise the question of paying now, waiting, or splitting it. The answer depends on your lender, your deal and how much interest waiting costs.
A worked example
Take a £200,000 balance at 4.5% with 25 years remaining, and £25,000 to overpay. Assume an example yearly allowance of 10% (£20,000), an example 3% charge on the amount above it, and a fixed deal with two years left. The charge and the allowance are examples only: they vary by lender and deal, and whether a charge applies after the deal ends depends on your lender.
| Option | Estimated interest effect over the whole term | Example charge |
|---|---|---|
| All £25,000 now | about £43,227 of interest saved, 5 years 1 month sooner | £150 (3% of £5,000) |
| £20,000 now and £5,000 after the deal ends | about £42,178 of interest saved, 5 years sooner | none in this example |
| All £25,000 after the deal ends | about £37,943 of interest saved, 4 years 8 months sooner | none in this example |
In this example, paying the extra £5,000 two years earlier saves about £1,049 more interest than waiting, against an example charge of £150. The 3% charge is an example only: a lender’s charge may be higher or lower, and a larger charge, a shorter wait, a different rate or a different amount would change the comparison. The figures assume the rate stays the same, which may not be true after your deal ends.
Questions worth asking
- What is your yearly allowance, when does it reset, and what happens if you go over it? See when your allowance resets and what an early repayment charge is.
- Does your lender charge anything once the deal period ends, and what rate will you move to?
- Will you remortgage at the end? If so, see how overpayments affect your next remortgage rate.
You can estimate a charge with your own figures in the early repayment charge calculator.
Figures are estimates from this site’s calculator, using the assumptions stated above each table. They are illustrations, not forecasts. Try your own figures in the free mortgage overpayment calculator.
If you are unsure whether overpaying suits you, consider speaking to a regulated mortgage adviser. This page is general information, not advice on your circumstances.
Questions people ask
Can I overpay more once my fixed rate ends?
It depends on your lender and the product you move to. Check your mortgage offer or ask your lender.
Is it worth waiting to avoid a charge?
It depends on the size of the charge, how long is left on the deal and the interest that waiting costs. The table shows one example, not a verdict. See is it worth paying an early repayment charge?
What happens to my overpayments if I remortgage?
See what happens to overpayments when you remortgage.
Other ways to look at it
overpaying or an offset mortgage, overpaying or keeping an emergency fund, overpaying or paying off other debt, what if your rate falls and you keep paying the same, overpaying with a variable income. For a first look at whether to overpay at all, see should I overpay my mortgage?