Mortgage Overpayment or Savings Calculator

The mortgage overpayment or savings calculator answers the question every homeowner with spare cash asks: is it better to pay the bank early or put that money on a deposit? Enter the remaining debt, your mortgage rate and the years left, the amount you can set aside monthly, and the deposit rate — the calculator compares both strategies in money at the end of the original mortgage term: how much the early repayer accumulates (interest saved plus the deposit after the loan is closed) and how much the saver accumulates. The result is a verdict with the size of the advantage and a chart year by year. All calculations run on your device.

How to use the calculator

Fill in five fields. Remaining debt — how much you still owe the bank. Mortgage rate — your interest rate. Years left — how many years remain on the schedule from today. Monthly overpayment — the amount you can add on top of the mandatory payment. Deposit rate — what banks actually offer on a deposit with monthly capitalization. The result appears instantly: a verdict, how much money each strategy is ahead by at the end of the term, how many months the overpayment shortens the loan, and how much interest it saves. The chart below shows how the two capitals grow year by year.

How the comparison works

Both strategies spend the same amount each month: the mandatory annuity payment plus the spare money. Only the direction differs. The early repayer pays the annuity and puts the spare money towards the principal — the schedule is recalculated with a shorter term while the payment stays the same, so the interest savings are maximized. As soon as the loan is closed, the whole amount (payment plus overpayment) goes to the deposit each month at your rate. The saver pays the mortgage strictly on schedule and puts the spare money on a deposit from the very first month. At the horizon of the original term we compare the accumulated capital: for the early repayer it is the interest saved plus the deposit after closing; for the saver it is the future value of the monthly contributions with capitalization.

When overpayment wins

Early repayment wins when the mortgage rate is higher than the deposit rate — which is the case most of the time outside periods of very high policy rates. Paying down a debt at 6.5% is a “deposit” with a guaranteed 6.5% annual return, tax-free and risk-free. The longer the remaining term and the larger the debt, the stronger the effect: annuity interest is charged on the balance, and every early dollar shrinks all future interest on it. A separate bonus is psychological: a closed loan removes the obligation and the risk of being left with a debt and no income. Finally, discipline: money paid to the bank cannot be spent on impulse purchases.

When a deposit wins

A deposit wins when its rate after tax exceeds the mortgage rate — for example during periods of high key rates when banks offer deposits pricier than your mortgage. Even at equal rates a deposit gives liquidity: the money can be withdrawn if you lose your income, fall ill, or spot a good investment. Another argument is the safety cushion: before repaying a loan early, it is worth building a reserve of 3–6 months of expenses, and a deposit is the natural place for it. If the cushion is not built yet, the deposit is unambiguously the right choice.

Model limitations

The calculation is simplified and does not account for: tax on deposit interest (enter the after-tax rate and the model becomes accurate), changes of the mortgage and deposit rates over time (the model treats both rates as flat for the whole term), early repayment fees (most countries have none, but check your contract), inflation (it “eats” both the deposit and the debt at about the same rate, so it barely affects the comparison) and the human factor: spare money on a deposit can be spent, money paid early cannot. The calculator gives a reference point for comparing strategies, not an exact financial forecast.

The calculation is for information only and is not individual investment advice.

Frequently asked questions

Which is better — early repayment or a deposit?
The rule is simple: if the after-tax deposit rate is higher than the mortgage rate — invest, otherwise repay early. Paying down a loan at 6.5% is a guaranteed 6.5% annual return without risks or taxes: every dollar paid reduces all future interest on it. Example: a debt of 175,000 $ at 6.5% for 15 years, 580 $ a month spare, a deposit at 4.3% — the overpayment closes the loan years earlier and leaves the bigger final capital. Check your own numbers in the calculator.
Should I reduce the payment or the term with an early repayment?
Reducing the term saves more interest: the payment stays the same and every early dollar keeps working against the full mandatory payment. Reducing the payment lowers the monthly burden — insurance against losing your income — but the interest savings are noticeably smaller. If the payment is comfortable, choose the term reduction. That is exactly the variant this calculator models.
When should I definitely repay the mortgage early?
When the mortgage rate is above the after-tax deposit rate, the safety cushion is already in place, there are no early repayment fees, and the debt is bothering you — the psychological relief of a closed loan also has value. It is especially effective in the first half of the term: that is when the annuity payment consists mostly of interest.
When should I definitely use a deposit?
When the after-tax deposit rate is above the mortgage rate, the safety cushion is not built yet (first a reserve of 3–6 months of expenses — then overpayments), big expenses are likely within the next year, or you expect a chance to invest the money profitably. A deposit keeps liquidity: money paid early cannot be taken back from the bank.
Does the calculator account for the deposit tax?
No, the tax is not deducted directly — the model compounds the deposit at the rate you enter. By default an average rate from World Bank statistics for your country is prefilled. To account for the tax, enter the after-tax rate: for example, with a 16% deposit and a 13% income tax the result is about 13.9% annually. Then the comparison is fair.
What if the deposit or mortgage rates change?
Recalculate: the model treats both rates as flat for the whole remaining term, like most bank calculators. If in a year banks start offering deposits pricier than your mortgage, the “deposit” strategy becomes better, and vice versa. Look at the chart: sometimes the break-even happens mid-term, and it makes sense to start with one strategy and switch to the other.

Updated: Oct 26, 2026

Related calculators

Deposit Calculator
Calculate earnings on a bank deposit: interest with monthly or daily capitalization, total balance, effective rate and a month-by-month schedule.
Compound Interest Calculator
See how your money grows: initial amount, monthly contributions, term and return. A year-by-year growth chart splits your result into money invested and interest earned.
Pension Calculator
Calculate your retirement capital from monthly contributions and expected return, and how much you can withdraw monthly. Compound interest, chart by year — free.
Rental Yield Calculator
Calculate the rental yield of a property: gross and net annual yield, payback period and comparison with a bank deposit at your country’s rate. Free and instant.
Rent or Buy Calculator
Find out what is cheaper — renting or buying a home: the buyer’s equity vs the renter’s savings after 5, 10, 20 years, with price growth, rent growth and deposit rates. Free.