When a fixed rate is about to expire, spare cash has two obvious homes — pay down the mortgage now, or hold it in savings/a Cash ISA and see what it earns. The right answer depends on your rate, your tax band, and how long you've actually got left on the fix. Enter your numbers for an instant, UK-specific answer.
This is a simplified estimate for education purposes, not regulated financial advice. It assumes your mortgage rate and savings rate both stay flat until your fix ends, taxes it as a single lump sum over the period rather than tax-year by tax-year, and doesn't check the £20,000 annual ISA allowance. Candid Finance Ltd is not authorised or regulated by the Financial Conduct Authority (FCA).
Both strategies put the same monthly amount to work — the only question is where. Overpaying reduces your mortgage balance early, which cuts the interest that accrues on it for the rest of your fix (and, if it clears your loan early, frees up your full monthly payment to be saved for whatever's left of the period). Saving leaves the mortgage on its normal schedule and instead compounds that same monthly amount in a savings account or Cash ISA. The calculator runs both scenarios over the time left on your fix and compares the two outcomes in pounds.
Interest from a standard (non-ISA) savings account counts as taxable income. Your Personal Savings Allowance (PSA) lets you earn some of it tax-free each year — above that, it's taxed at your marginal rate. A Cash ISA is tax-free regardless of amount, which is why it's usually the fairer comparison against mortgage overpayment for higher earners.
| Tax band | Personal Savings Allowance | Tax on interest above it |
|---|---|---|
| Basic rate | £1,000/yr | 20% |
| Higher rate | £500/yr | 40% |
| Additional rate | £0 | 45% (on all of it) |
As a rule of thumb: overpaying tends to come out ahead when your mortgage rate is meaningfully higher than the after-tax return you'd get from saving instead — which is common for additional-rate taxpayers in a standard savings account, since 45% tax can wipe out much of the headline rate. Saving tends to win when you have access to a Cash ISA at a rate close to your mortgage rate, since none of that return is lost to tax, and you keep the cash accessible rather than locked into your home. Early Repayment Charges on many fixed mortgages are a separate reason to prefer saving until the fix actually ends — check your mortgage terms before overpaying beyond any penalty-free allowance.
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