Loan Prepayment Calculator UK
See how much interest and time you save by making a one-time prepayment on your loan.
How it works
Compound interest earns returns on both your original money and the returns already added. Adding a regular monthly contribution accelerates growth further over time.
A = P(1 + r/n)^(nt) + contributions compounded monthly- Longer time horizons benefit most from compounding
- More frequent compounding gives slightly higher growth
- The donut shows how much of your final balance is interest vs money you put in.
Frequently asked questions
Does overpaying a loan really save money?
Yes. Extra payments reduce the balance interest is charged on, lowering total interest and often shortening the loan.
When is the best time to overpay?
As early as possible. Early payments remove the most future interest because they apply for the longest remaining time.
Does overpaying reduce my term or my payment?
It depends on the lender. Some shorten the term while keeping the payment; others lower the payment. Confirm which applies.
Are there early-repayment charges?
Some loans and fixed-rate mortgages charge them during a set period. Check your agreement before making large overpayments.
Should I overpay or save instead?
It depends on your loan rate versus what you could earn on savings, and your goals. Compare the two before deciding.
How do I make sure overpayments cut the capital?
Tell your lender the extra is for the capital balance, and check your statement to confirm it was applied correctly.
How overpaying a loan saves money
An overpayment is any extra amount you pay toward the loan balance beyond the scheduled payment. Because interest is charged on the outstanding balance, reducing it early cuts the total interest — and can either shorten the loan or lower future payments.
Why early overpayments matter most
In an amortising loan, early payments are mostly interest and little capital. Overpaying early therefore removes future interest on that amount for the rest of the term, so an overpayment in year one saves far more than the same amount near the end.
Worked example
On a £200,000 mortgage over 25 years at 5%, overpaying just £150 a month can shorten the term by several years and save many thousands in interest — the calculator shows the exact figures for your loan and overpayment.
Check for early-repayment charges, which some mortgages and loans apply during a fixed period, and confirm your lender applies overpayments to the capital rather than future interest.
Results are estimates for general guidance in United Kingdom and may not reflect the latest local rates, fees or rules. Check official sources before making decisions.