Overpaying Your Mortgage or Keeping an Emergency Fund?
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.
An emergency fund is cash you can reach quickly if your income stops or a large bill arrives. Money you overpay on your mortgage may be hard to get back, depending on your mortgage, so it is worth thinking about how much cash you want to keep reachable. How much cash to keep depends on your income, outgoings and dependants, and this page can only illustrate it.
What a few months of mortgage payments come to
Some guides suggest holding around three to six months of essential costs. Essential costs include more than the mortgage, so the table below covers only the mortgage part. It shows the payment on a 25-year repayment mortgage at 4.5%.
| Balance | Monthly payment | Three months | Six months |
|---|---|---|---|
| £100,000 | £555.83 | £1,667 | £3,335 |
| £150,000 | £833.75 | £2,501 | £5,003 |
| £200,000 | £1,111.66 | £3,335 | £6,670 |
| £250,000 | £1,389.58 | £4,169 | £8,337 |
| £300,000 | £1,667.50 | £5,003 | £10,005 |
Add your other essential costs, such as bills, food, transport and insurance, to get a fuller figure. Whether three months is enough depends on how secure your income is and whether others rely on it.
Questions worth asking
- If your income stopped tomorrow, how many months could you cover without the money you are thinking of overpaying?
- Whether overpaid money can be taken back depends on your mortgage. Does yours allow it, and how? Check your allowance and any charge too.
- If you needed the money back, what would it cost to replace it, and could you get it?
Our guides to whether to overpay and overpaying versus savings accounts go into the wider trade-off.
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
How big should an emergency fund be?
Some guides suggest three to six months of essential costs, but the right amount depends on your income, outgoings and dependants. This is general information, not advice on your circumstances.
Can I get overpaid money back?
It depends on your mortgage. Some lenders offer ways to borrow back or reduce overpayments, and others do not. Check your mortgage offer or ask your lender before you overpay.
Can I do both?
Yes, some people keep an emergency fund and overpay by an amount they can keep up. How you split spare cash is a personal choice; you may want to speak to a regulated mortgage adviser.
Other ways to look at it
overpaying or an offset mortgage, overpaying or paying off other debt, overpaying before or after your fixed rate ends, 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?