How to calculate the effect of an overpayment
- 1.
Enter the loan details
Type the outstanding principal, the number of remaining installments, the annual rate and the installment type (equal or decreasing).
- 2.
Add an overpayment
Enter a one-off overpayment, a monthly overpayment or both. Under advanced settings you can add an early repayment fee.
- 3.
Compare the scenarios
See how many months shorter the loan becomes, how much lower the installment is and how much interest each option saves.
- 4.
Check the schedule
Switch between the two scenarios to see the yearly repayment schedule after the overpayment.
Shorter term or lower installment?
After an overpayment, Polish banks usually ask what to do with it:
- Shorten the term (skrócenie okresu) - the installment stays the same and the loan ends earlier. Interest is charged on a smaller balance for less time, so this option saves the most.
- Lower the installment (zmniejszenie raty) - the end date stays put but the monthly payment drops. You save less interest, but gain breathing room in your monthly budget.
The earlier you overpay and the higher the rate, the bigger the effect. In the first years of a long mortgage most of each installment is interest, so every extra złoty of principal stops interest from accruing for many years.
Example: PLN 300,000, 240 installments at 7%
Without an overpayment the installment is PLN 2,325.90 and total interest is PLN 258,214.37. After a one-off overpayment of PLN 20,000:
| Shorter term | Lower installment | |
|---|---|---|
| Term | 209 installments (31 months less) | 240 installments (unchanged) |
| Installment | PLN 2,325.90 | PLN 2,170.84 (PLN 155.06 less) |
| Total interest | PLN 204,448.28 | PLN 241,000.69 |
| Interest saved | PLN 53,766.09 | PLN 17,213.68 |
Regular overpayments are even more powerful: an extra PLN 500 a month on the same loan cuts it to 167 installments and saves about PLN 89,042 in interest. A one-off PLN 50,000 with a shorter term saves about PLN 113,856.
Timing matters too. The same PLN 20,000 overpaid on a loan with only 120 installments left saves about PLN 19,010 - roughly a third of the saving on the 240-month loan.
Early repayment fees and other things to check
- Fees: for Polish mortgages, a bank may charge an early repayment fee only in specific cases - with a variable rate typically only during the first 3 years, and capped by the Mortgage Credit Act (ustawa o kredycie hipotecznym); for consumer loans the fee is limited too. Check your agreement and enter the fee as a percentage under advanced settings - the calculator deducts it from the saving.
- Variable rates: the calculator assumes a constant rate. If your rate follows WIBOR or POLSTR plus a margin, the real result will change with each rate reset.
- Alternatives: if your loan rate is low and a deposit or bonds pay more after the 19% capital gains tax, overpaying is not always the best use of cash. Keep an emergency fund first.
- Decreasing installments: when you shorten the term, the principal part stays fixed, so the number of installments falls roughly in proportion to the overpayment.
The result is an estimate - your bank will give exact figures for your loan. To model a new loan from scratch, use the mortgage calculator for Poland or the personal loan calculator; to compare overpaying with saving, try the compound interest calculator.
Frequently asked questions
Which saves more: a shorter term or a lower installment?
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In terms of total cost, shortening the term always saves more, because interest is charged on a smaller balance for less time. A lower installment eases your monthly budget but saves less interest.
Can a Polish bank charge a fee for overpaying a loan?
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Sometimes. For variable-rate mortgages a fee is usually possible only in the first 3 years and is capped by law; consumer loans have their own limits. Check your agreement and enter any fee under advanced settings.
When is the best time to overpay?
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As early as possible. At the start of the term most of each installment is interest, so the same amount paid in the first years saves much more than if paid later.
Does the calculator handle variable interest rates?
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No, it assumes a constant rate for the whole period. For a variable-rate loan treat the result as a guide and recalculate after each rate change.
How much will I save by overpaying PLN 500 a month?
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On a PLN 300,000 loan with 240 installments at 7%, an extra PLN 500 a month shortens repayment to 167 installments and saves about PLN 89,042 in interest. Enter your own figures to see your result.
Should I overpay my mortgage or invest the money?
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Overpaying gives a guaranteed return equal to your loan rate. If you can reliably earn more after tax elsewhere, investing may pay off, but it carries risk. Keep a cash buffer either way.
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