Early Mortgage Repayment: How Much Do You Save and When Is It Worth It?
thecalculator.tech
6 June 2026 · 5 min read
Find out how much you save in interest with early repayment, when to choose shorter term vs. lower payment, and which fees can eat into your savings.
Shorter term vs. lower payment
When you make an early repayment, the bank lets you choose: reduce the monthly payment while keeping the term, or keep the payment and shorten the term. Shortening the term saves more total interest, because the outstanding balance falls faster. Reducing the payment gives more immediate monthly cash flow but saves less interest overall.
A numerical example
A €200,000 mortgage over 30 years at 3%. Early repayment of €20,000 in year 5 with ~€176,000 outstanding: if you choose to shorten the term, the remaining term drops from 25 to ~19 years, saving ~€25,000 in interest. If you choose to reduce the payment, the monthly payment falls by ~€100 but you only save ~€10,000 in interest.
Fees to consider
Spain's 2019 Real Estate Credit Act caps early repayment fees: for variable mortgages, maximum 0.25% in the first 3 years and 0.15% in the next 2 (then 0%). For fixed mortgages, maximum 2% in the first 10 years and 1.5% from year 11. These fees can reduce net savings.
When NOT to repay early
If you have higher-rate debts (credit cards, personal loans), pay those off first. If the expected return on an alternative investment exceeds the after-tax cost of the mortgage, investing may be better. And if you have limited cash, maintaining an emergency fund is the priority.
Check your mortgage contract before repaying early. Consult your bank to confirm the exact conditions.
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