Enter what you still owe, the interest rate, the number of monthly payments left and how much you want to repay. The calculator compares the loan without and with that payment: the interest you save, the new term or monthly payment, then the early repayment charge. For a mortgage, the charge is the one in your mortgage offer; for a personal loan or car finance, it is capped by the Consumer Credit Act 1974, which applies across England, Wales, Scotland and Northern Ireland. Every amount is rounded to the penny, with the workings shown.
Enter your loan
Your latest statement shows the balance and how many payments are left. Enter the loan's interest rate, not the APR: the APR includes fees and is not what interest is worked out on. To pay the loan off, enter the whole balance as the amount to repay.
Shorter term or lower payment
After a part repayment you can keep the same monthly payment and finish sooner, or keep the same term and pay less each month. Shortening the term saves more interest, because the balance falls faster; lowering the payment eases your budget. The 'Before and after' table puts the two side by side. Check with your lender which of the two it applies.
Early repayment charges on a mortgage
The cap in section 95A of the Consumer Credit Act 1974 does not apply to agreements secured on land, so the charge on a mortgage is the one set out in your mortgage offer. Enter it as a percentage of the amount repaid, or 0 if you have none. If your offer lets you overpay part of the balance each year without a charge, enter how much of this payment it covers as the charge-free allowance.
Personal loans and car finance
You can repay all or part of a regulated consumer loan at any time. The lender can only ask for compensation while the interest rate is fixed, and only once your early repayments in a 12-month period exceed £8,000. It must be fair and objectively justified, and it can never be more than 1% of the amount repaid (0.5% when a year or less is left to the agreed end date) or the interest you would have paid up to that date. Nothing can be claimed for an overdraft or a payment made by payment protection insurance. These rules apply to agreements made on or after 11 June 2010.
What the calculation assumes
Equal monthly payments, interest at the annual rate divided by 12, and an early repayment made on a payment date. It leaves out insurance, interest-only and offset mortgages, and payment holidays. Your lender's settlement figure is what counts: for a consumer loan it can include interest up to 28 days after your notice, and on a loan of more than a year one month more, so it can be a little higher than the balance.
Monthly rate r = annual rate ÷ 12; monthly payment = balance × r ÷ (1 − (1 + r)^−n), where n is the number of payments left. Each month's interest is rounded to the penny, and the last payment clears the loan.
Interest saved = interest left without the repayment − interest left after it.
Mortgage: charge = rate in your offer × (amount repaid − charge-free allowance).
Personal loan or car finance: no compensation unless your early repayments in 12 months exceed £8,000; otherwise compensation ≤ the lower of 1% of the amount repaid (0.5% with a year or less left) and the interest left.
Net saving = interest saved − charge.
Example: overpaying £20,000 on a £200,000 mortgage
You owe £200,000 at 4.5% with 25 years (300 payments) left, so you pay £1,111.66 a month. Paying £20,000 off and keeping the same payment ends the mortgage after 20 years and 10 months, 4 years and 2 months sooner, and saves £35,968.82 of interest. With a 3% early repayment charge (£600.00), the net saving is £35,368.82. Keeping the 25 years instead lowers the payment to £1,000.50 a month and saves £13,351.61 of interest.
