Overpaying your mortgage: shorter term or lower installment?

If you have spare money, you can overpay your mortgage – repay part of the principal earlier.

Option 1: shorten the term

• The installment stays roughly the same.
• The loan ends earlier.
• Maximum interest saving.

Option 2: lower the installment

• The term stays the same.
• Each monthly payment becomes smaller.
• More flexibility in your monthly budget, smaller saving than option 1.

Which to choose?

• Stable income and a financial cushion? Shorter term saves the most.
• Want security in case of worse months? Lower installment.
• Planning a refinance or new loan? A lower installment can improve creditworthiness.

Check the fees

Overpayments may be subject to a fee in the first 3 years of a variable-rate loan or during a fixed-rate period. Many banks allow free overpayments online.

Overpay or invest?

If your savings earn less than your mortgage rate, overpaying is usually a safe, guaranteed "return". Keep an emergency fund first.

See exactly how much you would save – and how the installment and end date change – in our overpayment calculator.

Want to know how your current loan compares with today's offers? Try the refinance option in the calculator.