Mortgage lump sum overpayment calculator.

Lump sum overpayments: get the timing right

A one-off overpayment works differently from a regular monthly one. The biggest variable is usually the 10% annual allowance, a poorly-timed £20,000 lump sum can cost you £200–£500 in penalties that a two-week delay would have avoided.

Split across tax years for big lumps

If your lump sum would breach the 10% allowance, splitting it across two tax years (say, £9,000 in March and £9,000 in April) often avoids the Early Repayment Charge entirely. Most lenders reset the allowance on the anniversary of your mortgage starting, not on the tax year, check the specifics on our Nationwide, Halifax or other lender pages.

Shorten the term or lower the payment?

When you make a lump sum overpayment, your lender will ask whether to shorten the term or reduce your monthly payment. Shortening saves you much more interest overall, but locks you into the current payment. Lowering the payment gives you breathing room but costs thousands over the life of the loan. Our term-vs-payment guide walks through both with numbers.

Common lump sum situations

• Inheritance: overpay within allowance, park the rest in a high-interest account until next tax year.
• Work bonus: consider whether a pension contribution via salary sacrifice would be more tax-efficient first.
• House sale proceeds: usually worth lump-summing straight in if the ERC allowance permits.
• Redundancy payment: keep 6 months as an emergency fund before any overpayment.