Mortgage Calculator

How the mortgage calculation works

A repayment mortgage is paid off in equal monthly instalments over a fixed term. Each instalment is worked out with the standard amortization formula:

M = P * r * (1 + r)^n / ((1 + r)^n - 1)

Here P is the amount you borrow (the property price minus your deposit), r is the monthly interest rate (the annual rate divided by 12) and n is the total number of monthly payments (the term in years times 12). The calculator solves this instantly and then walks the balance forward month by month to build the year-by-year table.

A worked example

Say you buy a 250,000 home with a 50,000 deposit, so you borrow 200,000 at 5% over 25 years. The monthly rate is 0.05 / 12 = 0.004167 and there are 300 payments. The formula gives a monthly payment of about 1,169. Over the full term you repay roughly 350,700, which means about 150,700 in interest on top of the 200,000 borrowed. Drop the rate to 4% and the payment falls to about 1,056, saving well over 30,000 across the life of the loan.

What it does not include

This is a principal-and-interest estimate. Your true monthly outgoing may also include buildings insurance, property taxes and any lender fees, and a variable or tracker rate will change over time. Treat the figure as a solid planning baseline rather than a formal quote.

One number worth watching is your loan-to-value, or LTV: the loan as a percentage of the property price. A bigger deposit means a lower LTV, and lenders reserve their sharpest rates for borrowers under 60% or 75% LTV. Nudging your deposit past one of those thresholds can lower the rate you are offered, which is why it is worth testing a few deposit sizes here before you apply.

Comparing this against a personal or car loan? Try the loan calculator. Curious how the same monthly amount could grow if invested instead? The compound interest calculator shows that, and the percentage calculator is handy for working out loan-to-value and deposit sizes.

Frequently asked questions