Overpaying Your Mortgage With a Variable Income
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.
If your income varies, for example because you are self-employed, a regular overpayment can be hard to keep up, and a lump sum when money is available can be easier. This page shows what the pattern of payments could change, using the same total each year.
The same £6,000 a year, paid four ways
For a £200,000 balance at 4.5% with 25 years remaining, the table shows estimates if you overpay £6,000 a year in four different patterns, assuming your lender lets you choose the timing, the rate stays the same, and there are no fees or early repayment charges.
| Pattern | Estimated result |
|---|---|
| £500 every month | about £63,888 of interest saved, 11 years sooner |
| £1,500 every three months | about £63,451 of interest saved, 11 years sooner |
| £3,000 twice a year (months 6 and 12) | about £62,798 of interest saved, 11 years sooner |
| £6,000 once a year (month 12) | about £61,495 of interest saved, 10 years 10 months sooner |
The same total is paid each year in every pattern, so the differences come from timing: money that reaches the mortgage sooner reduces more interest. The table shows the size of the difference. That has to be weighed against how easy each pattern is to keep up.
Your contractual monthly payment still has to be met whichever pattern you choose. The patterns above are extra payments on top of it.
Questions worth asking
- Can you reduce, pause or restart a regular overpayment, and does your lender need notice? See how to overpay your mortgage.
- Would a lump sum in a good month exceed your yearly allowance? See the UK mortgage overpayment cap and lump sum versus monthly overpayments.
- How much cash do you want to keep available in a lean month? See overpaying or keeping an emergency fund.
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
Is it better to overpay monthly or in lump sums if my income varies?
Other things being equal, money that reaches your mortgage sooner reduces more interest, and the table shows how much difference the pattern makes in this example. What you can keep up and what your lender allows also matter.
Can I stop overpaying in a lean month?
It depends on your lender. Some let you stop or change a regular overpayment easily and others need notice. Check before you set one up.
Can a mortgage with flexible features help?
Some mortgages offer features such as payment holidays or the ability to borrow back overpayments, but they vary by lender and product and may carry different terms. Check the terms, and consider speaking to a regulated mortgage adviser.
Other ways to look at it
overpaying or an offset mortgage, overpaying or keeping an emergency fund, 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. For a first look at whether to overpay at all, see should I overpay my mortgage?