In a climate of continued economic pressure and rising living costs, many homeowners are reassessing their financial plans. A growing number are opting to overpay their mortgages, a strategy gaining traction as a response to higher borrowing rates and unstable savings returns.
Mortgage expert and financial broadcaster Martin Lewis has advised that small, regular overpayments can lead to significant long-term benefits, particularly when interest rates on mortgages outpace those of typical savings accounts. The approach is being increasingly adopted across the UK, with householders looking to offset interest and regain control of their repayment timelines.
Modest Monthly Overpayments Bring Long-Term Gains
According to MoneySavingExpert.com, homeowners with a standard 25-year mortgage on a £150,000 property, having paid a 10% deposit, may face monthly repayments of approximately £734—depending on the interest rate. By overpaying just £66 per month, borrowers could shave over £13,000 in interest and reduce the total repayment period by three years and five months.
This strategy is becoming more common, especially among those seeking to minimise the impact of rising borrowing costs. Lewis said: “If your mortgage rate is around the same, or higher, than your savings rate, then it makes sense to overpay.”
The benefits go beyond reduced interest. Overpayments, whether regular or one-off, can either lower the outstanding balance or shorten the repayment term, giving borrowers greater flexibility. Once an overpayment is made, lenders typically recalculate monthly repayments to reflect the lower balance.
Real-Life Examples Reinforce the Trend
The approach is not only theoretical. Readers of MoneySavingExpert.com have shared their experiences, highlighting real-world benefits. One, identified as Debbie, stated: “Started making overpayments on my mortgage seven years ago. Saved £18,600 in interest and paid up eight years and three months early.” The financial freedom gained has since allowed her to redirect funds into retirement planning.
Another reader, Letitia, noted she had made 13 additional payments over time, resulting in a £5,000 interest saving and reducing her mortgage term by four years.
The decision to overpay is not always straightforward. Lewis emphasised the need to compare mortgage and savings interest rates, and to consider individual circumstances—such as tax on savings and length of mortgage remaining. Overpaying may not be the best route for everyone, but for those with accessible cash and higher mortgage rates, it remains a practical and impactful option.
