Extra £200 a month: overpay mortgage, ISA or pension?
Have some spare money each month? See what it does three ways, side by side: overpaying your mortgage (interest and time saved), a Stocks and Shares ISA, or a pension with tax relief. Change any assumption and the comparison updates instantly. This shows the trade-offs; it does not tell you which to choose.
Repayment mortgage at a fixed rate; investments grow at a constant assumed return less fees; pension by relief at source in England, Wales or Northern Ireland. Nothing here is a forecast.
- Mortgage overpayment£0
- Stocks & Shares ISA value£0
- Pension value£0
Side by side
The same monthly amount, three ways, over your chosen years. No option is marked as best: it depends on your circumstances.
How each grows, year by year
Dotted blue: how much less you owe on the mortgage. Green: ISA value. Dashed purple: pension value (including 20% relief at source). All before inflation; where lines overlap, the options are worth about the same.
Assumptions in this comparison
- Mortgage: repayment mortgage, the rate stays the same for the rest of the term, and the overpayment is added every month on top of the normal payment. Your lender may limit overpayments or charge early repayment charges: check your deal.
- Investments: a constant yearly return, applied monthly, less a yearly fee. Real returns go up and down and can be negative; returns are not guaranteed.
- ISA: no tax inside the ISA; the 2026/27 allowance is £20,000 a year across all your ISAs.
- Pension: relief at source, so the provider adds 20% of the gross (you pay £200, £250 goes in). Higher or additional rate relief you claim back is shown separately and not added to the pot. Employer contributions are not included. Withdrawals are usually 25% tax-free and the rest taxed as income, which is not deducted here.
- Inflation: "today's money" divides by (1 + inflation) for each year.
- Not advice; returns not guaranteed. This is a neutral illustration, not a recommendation of any option.
Quick answer
An extra £200 a month for 10 years: overpaying a £150,000 mortgage at 4.5% saves a five-figure sum in interest and ends it years sooner; an ISA or a relief-at-source pension at an assumed return could grow to more than you paid in, with the pension usually not available before 55 (57 from April 2028). An illustration on assumed constant returns, not advice or a recommendation. Investment values can fall. Tax rules from GOV.UK, checked 18 October 2026.
Overpaying the mortgage
Every pound you overpay comes straight off the balance, so you stop paying interest on it. That makes the "return" on an overpayment your mortgage rate, with no investment risk, as long as the rate stays the same. The calculator runs the mortgage month by month (the same maths as our UK mortgage calculator) with and without the overpayment, and shows the interest saved over the rest of the term and how much sooner it ends. The money is tied up in your home: you can only get it back by selling, remortgaging or borrowing again.
A Stocks and Shares ISA
Growth and income inside an ISA are not taxed, and you can usually take the money out when you like, but the value can fall as well as rise. The projection uses the same monthly model as our Stocks and Shares ISA calculator: your assumed return less fees, compounded monthly. You can pay up to £20,000 a year into ISAs in 2026/27.
A pension
With a relief at source pension, GOV.UK says your provider claims tax relief at 20% and adds it to your pot: you pay £200 and £250 goes in. If you pay 40% or 45% tax you can claim more back (worked out here from your salary by the same engine as our take-home pay calculator); that comes back to you, not into the pension. When you take money out, GOV.UK says “you can usually take up to 25% of the amount built up in any pension as a tax-free lump sum”; the rest is taxed as income then.
When you can take it. GOV.UK: with personal and workplace pensions, when you can take money “will depend on your pension scheme's rules, but it's usually after you're 55.” HMRC's policy paper on the normal minimum pension age says it rises “from age 55 to 57 in April 2028” (from 6 April 2028), with protection for some existing scheme members. Pension money is locked away until then, which the ISA and (indirectly) the mortgage are not.
Things the numbers can't weigh for you
- How soon you might need the money, and whether you have an emergency fund.
- Your mortgage deal: fixed-rate end date, overpayment limits and early repayment charges.
- Employer pension matching, which can add more than any of these figures.
- Your tax rate in retirement and how comfortable you are with investment risk.
For a personal recommendation, speak to a regulated financial adviser. Free, impartial guidance is available from MoneyHelper.
The formula
- ISA: valuenext = value × (1 + (return − fee) ÷ 12) + monthly amount
- Pension: the same, with monthly amount ÷ 0.8 (20% relief at source)
- Extra relief to claim: from your salary's tax bands (20% more at 40%, 25% at 45%)
- Today's money = value ÷ (1 + inflation)years
See the formula with your own numbers
These update live from the calculator inputs above.
Frequently asked questions
Is it better to overpay my mortgage or invest?
It depends on your circumstances, and this page does not recommend either. An overpayment saves interest at your mortgage rate with no investment risk; an ISA or pension might grow more over time but can also fall in value. Access, your mortgage deal and your tax position all matter. A regulated adviser can give a personal recommendation.
How much does £200 a month put into a pension actually add?
With relief at source, your provider adds 20% of the gross, so £200 from you puts £250 in the pot. Higher-rate taxpayers can claim a further 20% (and additional-rate 25%) on the gross contribution back through Self Assessment or HMRC.
When can I take money out of a pension?
GOV.UK says it depends on your scheme's rules but is usually after you're 55. HMRC's policy paper says the normal minimum pension age rises from 55 to 57 in April 2028, with protection for some existing scheme members.
Is pension money taxed when I take it out?
GOV.UK says you can usually take up to 25% of a pension as a tax-free lump sum (up to the lump sum allowance); the rest is taxed as income when you take it. This comparison shows pension values before that tax.
Can I overpay my mortgage as much as I want?
Not always. Many mortgage deals limit how much you can overpay each year without an early repayment charge. Check your mortgage terms before overpaying.
Method & sources
- Calculation: mortgage by
simulatefrom our UK mortgage calculator engine (monthly amortisation with and without the overpayment); ISA and pension growth byisaComputefrom our Stocks and Shares ISA calculator engine; pension relief bythComputefrom our take-home pay engine (relief at source at 20%, plus higher and additional rate relief and any restored Personal Allowance on your salary). Today's money = value ÷ (1 + inflation)years. - Relief at source, higher-rate relief and the 25% tax-free lump sum: GOV.UK — pension tax relief and lump sum allowance.
- Pension access usually after 55: GOV.UK — early retirement: personal and workplace pensions. Rise to 57 from 6 April 2028: HMRC policy paper — Increasing Normal Minimum Pension Age (published 4 November 2021).
- ISA allowance 2026 to 2027 (£20,000): GOV.UK — gov.uk/individual-savings-accounts.
- Income Tax bands 2026 to 2027: GOV.UK — gov.uk/income-tax-rates.
- All sources checked 18 October 2026. Verification: automated tests, run before every update, check the results against hand-worked examples and confirm every tax and National Insurance figure comes from the same tested engine as our take-home pay calculator.
- Reviewed: .
Not advice; returns not guaranteed. This is an educational illustration, not a personal recommendation. Investments can fall as well as rise and you may get back less than you put in. Mortgage terms, tax rules and pension rules can change and depend on your circumstances; confirm with your lender, GOV.UK or a regulated financial adviser.
Run your own numbers
Change the amount, years and assumptions to compare the three options on your own numbers.
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