Paying your mortgage off early
Some mortgages allow a set amount of overpayment each year, while paying off more than this — particularly during a fixed-rate period — may result in an early repayment charge (ERC)
This can reduce how much interest you pay, save you money, and take you closer to being mortgage-free.
So how do you achieve it?
In this article we cover:
How to pay off your mortgage early
How much can you overpay on your mortgage?
Benefits of paying more towards your mortgage
How to pay off your mortgage early
Any extra money you pay into your mortgage over your standard monthly payment is called an overpayment. There are a few ways you can do this:
| What it means | Paying more than your required monthly mortgage payment on an ongoing basis. |
|---|---|
| When it may be useful | You have some spare money in your monthly budget and want to reduce your mortgage balance gradually. |
| Potential benefit | Can reduce the interest you pay and help you repay your mortgage sooner. |
| What to check before you pay | What’s your overpayment allowance?
Does an early repayment charge (ERC) apply?
How does your bank apply the extra payment? |
| What it means | When it may be useful | When it may be useful |
|---|---|---|
| Paying more than your required monthly mortgage payment on an ongoing basis. | You have some spare money in your monthly budget and want to reduce your mortgage balance gradually. | You have some spare money in your monthly budget and want to reduce your mortgage balance gradually. |
| What it means | Potential benefit | Potential benefit |
| Paying more than your required monthly mortgage payment on an ongoing basis. | Can reduce the interest you pay and help you repay your mortgage sooner. | Can reduce the interest you pay and help you repay your mortgage sooner. |
| What it means | What to check before you pay | What to check before you pay |
| Paying more than your required monthly mortgage payment on an ongoing basis. |
What’s your overpayment allowance?
Does an early repayment charge (ERC) apply?
How does your bank apply the extra payment? |
What’s your overpayment allowance?
Does an early repayment charge (ERC) apply?
How does your bank apply the extra payment? |
| What it means | Making an additional payment towards your mortgage, separate from your normal monthly payment. |
|---|---|
| What it may be useful | You’ve received a bonus, inheritance, tax refund or other lump sum and don’t need all of it for short-term costs. |
| Potential benefit | Can reduce your outstanding balance and the total interest charged over time. |
| What to check before you pay | Is the amount within your allowance?
Does an ERC apply?
Do you need to give notice?
Do you need that money for savings? |
| What it means | What it may be useful | What it may be useful |
|---|---|---|
| Making an additional payment towards your mortgage, separate from your normal monthly payment. | You’ve received a bonus, inheritance, tax refund or other lump sum and don’t need all of it for short-term costs. | You’ve received a bonus, inheritance, tax refund or other lump sum and don’t need all of it for short-term costs. |
| What it means | Potential benefit | Potential benefit |
| Making an additional payment towards your mortgage, separate from your normal monthly payment. | Can reduce your outstanding balance and the total interest charged over time. | Can reduce your outstanding balance and the total interest charged over time. |
| What it means | What to check before you pay | What to check before you pay |
| Making an additional payment towards your mortgage, separate from your normal monthly payment. |
Is the amount within your allowance?
Does an ERC apply?
Do you need to give notice?
Do you need that money for savings? |
Is the amount within your allowance?
Does an ERC apply?
Do you need to give notice?
Do you need that money for savings? |
| What it means | Paying the remaining mortgage balance, including any interest, fees or charges due, so that your mortgage account can be closed. This is known as mortgage redemption. |
|---|---|
| When it may be useful | You’re ready to become mortgage free, are selling your home, or have decided to clear the full balance rather than make an overpayment. |
| Potential benefit | Ends your mortgage payments and means no further interest is charged once the mortgage has been fully repaid. |
| What to check before you pay | Have you requested a redemption statement to confirm the amount due on a specific date?
Do ERCs, exit fees or other charges apply?
Do you have enough in savings as an emergency fund?
Do you understand how your bank wants the final payment made? |
| What it means | When it may be useful | When it may be useful |
|---|---|---|
| Paying the remaining mortgage balance, including any interest, fees or charges due, so that your mortgage account can be closed. This is known as mortgage redemption. | You’re ready to become mortgage free, are selling your home, or have decided to clear the full balance rather than make an overpayment. | You’re ready to become mortgage free, are selling your home, or have decided to clear the full balance rather than make an overpayment. |
| What it means | Potential benefit | Potential benefit |
| Paying the remaining mortgage balance, including any interest, fees or charges due, so that your mortgage account can be closed. This is known as mortgage redemption. | Ends your mortgage payments and means no further interest is charged once the mortgage has been fully repaid. | Ends your mortgage payments and means no further interest is charged once the mortgage has been fully repaid. |
| What it means | What to check before you pay | What to check before you pay |
| Paying the remaining mortgage balance, including any interest, fees or charges due, so that your mortgage account can be closed. This is known as mortgage redemption. |
Have you requested a redemption statement to confirm the amount due on a specific date?
Do ERCs, exit fees or other charges apply?
Do you have enough in savings as an emergency fund?
Do you understand how your bank wants the final payment made? |
Have you requested a redemption statement to confirm the amount due on a specific date?
Do ERCs, exit fees or other charges apply?
Do you have enough in savings as an emergency fund?
Do you understand how your bank wants the final payment made? |
Want to make an extra payment? Find out how to make an overpayment on your mortgage.
Ready to clear your mortgage in full? Find out how to repay your mortgage in full.
1. How to set up a regular overpayment
A regular overpayment is when you pay more than your standard monthly payment each month. You can do this in 3 ways:
-
Contact your lender and ask them to increase your Direct Debit amount each month
-
Set up a standing order to make additional payments each month
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Make an overpayment using your HSBC Mobile Banking app
If your monthly payment is £1,000 and you choose to pay £1,200 (by either increasing your Direct Debit or setting up a Standing Order), this is a monthly overpayment of £200.
As this is not part of your standard (or contractual) mortgage payment, you can cancel or amend this amount when it suits you. Your lender should be able to explain what methods they allow for regular overpayments.
2. Make a lump sum payment
If you’re looking to pay more off your mortgage but prefer to do it now and again (rather than every month), you can consider making lump sum payments.
How much can you overpay on your mortgage?
The amount of extra money you can pay off your mortgage without a fee can vary and will depend on the type of product you are currently on. It’s important to check with your lender how much extra you can pay off your mortgage to avoid any potential early repayment charge (ERC).
You can view all your overpayment information on your HSBC Mobile Banking App.
Can you pay extra on your fixed rate mortgage?
If you have a fixed rate mortgage, most lenders allow you to pay up to 10% of your loan balance each year without incurring an ERC. This is called an annual overpayment allowance (AOA). If you go over your AOA, there could be an ERC so it’s worth checking with your lender what your AOA is to avoid this.
Can you pay extra on your tracker mortgage?
If you're on a variable rate of interest, such as a tracker mortgage, most lenders allow you to make unlimited overpayments without incurring an ERC.
The above isn’t the case for every lender, so you should always check how much extra you can pay before deciding on any overpayments.
Benefits of paying more towards your mortgage
If you have a repayment mortgage, your standard monthly payment is used to pay the interest that has accrued on the capital balance of your loan since your last monthly payment, and some of it is used to reduce the balance.
When you make an overpayment to your mortgage, all of that payment goes directly towards reducing your mortgage balance (assuming that your account is up to date and that there are no arrears). This has these key effects:
-
As your mortgage balance is lower, you’ll pay less interest on your balance. For most lenders, this applies from the date you make any overpayment, so the benefit is immediate.
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As the balance reduces more quickly, your original mortgage term may shorten, enabling you to finish paying off your mortgage earlier.
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As your mortgage term shortens, you won’t be paying interest for as long, potentially saving thousands of pounds.
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When your mortgage balance reduces, it will give you a lower loan-to-value (LTV) ratio. If you were to then switch mortgage rate or remortgage, having a lower LTV could make you eligible for lower rates.
Mortgage overpayments calculator
Use our calculators to find out how a regular or lump sum overpayment could reduce the term and interest paid on your mortgage.
Should you overpay on your mortgage?
Making overpayments to help pay off your mortgage early is a good option for some, but there are things to consider:
1. Does your mortgage allow you to make overpayments?
If your mortgage has an annual overpayment allowance, paying extra towards your mortgage could save you money. But you will need to stay within this limit to avoid an ERC.
2. Do you have expensive debts to pay?
Credit cards, loans, and overdrafts tend to have higher interest rates than mortgages. You may consider paying these expensive debts off first before you overpay on your mortgage.
3. Do you have an emergency fund?
If you don’t already, it’s a good idea to build up savings before paying extra off your mortgage. Ideally, save 3 to 6 months’ worth of living costs as an emergency fund. This way, if you’re faced with an unexpected bill, you’re more likely to have available money rather than needing to borrow.
How to make overpayments and additional payments
If you have a mortgage that allows you to make overpayments, you can contact your lender to change your payment amount.
Most lenders allow you to set up a Direct Debit or transfer a lump sum to your mortgage account online or over the phone.
If you’re an HSBC customer, you can make overpayments online or by phone.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
This article was last updated:24/09/2026, 11:48
