Overpay the mortgage, or save it?
You've got some spare cash each month. Throw it at the mortgage and you clear the debt sooner and dodge the interest. Put it in savings and it earns a return you can keep your hands on. This works out where you'd actually end up better off over the rest of your term — and shows the rule of thumb behind it. Free, no sign-up.
A guide, not financial advice. It compares your wealth at the end of the term either way: overpaying clears the mortgage early, after which the freed-up payment is saved at the rate you set; saving keeps the normal mortgage running and puts the spare cash into savings. Both end with the mortgage gone, so it's a like-for-like comparison. It assumes the rates hold steady and ignores any early-repayment charge. Check your lender's overpayment limit and talk to a mortgage broker or financial adviser before a big decision. Nothing you type here leaves your browser.
Compare the mortgage rate with your savings rate, after tax.
It mostly comes down to two numbers. Every £1 you overpay earns you a guaranteed, risk-free return equal to your mortgage rate — that's the interest you no longer pay. Every £1 you save earns your savings rate, after tax. So if your mortgage rate is higher than your after-tax savings rate, overpaying usually wins; if your savings rate is higher, saving wins. This tool does the exact pounds-and-pence version of that.
Tax and ISAs tip the scales. Savings interest can be taxed once you're past your Personal Savings Allowance, which quietly drags the savings rate down — so always use the after-tax figure. Inside an ISA there's no tax, so the headline rate stands, which makes saving more competitive.
Overpaying is certain; investing isn't. The interest you save by overpaying is locked in. A savings or investment return — especially in the stock market — is a forecast that can fall as well as rise. Many people happily accept a slightly smaller expected gain from overpaying in exchange for the certainty and the smaller debt.
Do the basics first. Before overpaying, clear any expensive debt (credit cards, car finance) — that interest is almost always higher than your mortgage — and keep an emergency fund of three to six months' costs. Money overpaid onto a mortgage is hard to get back; money in savings isn't.
Mind the 10% rule. On most fixed deals you can overpay up to 10% of the balance a year with no penalty. Go over and you may pay an early-repayment charge that wipes out the benefit — so check your lender's limit.
Keep on top of the mortgage either way.
Stead keeps your whole home in one place — the mortgage and bills, the certificates and renewals, the jobs that need doing — and tracks the value and running costs over time, so the big money decisions are easier to make with everything in front of you.