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Enter your balance, rate and term, then a monthly overpayment or lump sum, to see the two prizes: total interest saved and term shortened. The compounding works in your favour — overpaid pounds stop accruing interest immediately and keep not-accruing it for the rest of the term.
For contractors the overpayment question is really a cash-allocation question: contract income arrives lumpy, and the choice between overpaying, offsetting, and holding reserves deserves the comparison this page frames.
Most fixed deals allow 10% of the balance in annual overpayments without penalty; beyond the allowance, early repayment charges bite. The calculator's savings assume penalty-free overpayment — staying inside the allowance, or timing lumps to deal anniversaries and expiries, is the practical discipline.
Reducing the term versus reducing the payment is the standing election on lump sums: term reduction maximises the interest saving; payment reduction maximises flexibility. The calculator shows the term-reduction prize; your circumstances pick the election.
Overpaid money is locked in (retrievable only by borrowing again); offset money saves the same interest while staying accessible — which for contractors holding tax reserves and gap buffers is frequently the better structure, as our Barclays and Scottish Widows pages map. Reserves come first regardless: overpaying the mortgage while carrying expensive unsecured debt or running without an emergency fund is enthusiasm misallocated.
The honest order: expensive debt, then reserves, then the overpay-versus-offset election on what remains — run with your actual numbers, which is a conversation we have routinely.
Same interest saving, different access: overpayments lock the money in; offsets keep it reachable — which suits contractors holding tax reserves and gap buffers. The election depends on your cash pattern, and we run it with your actuals.