Mortgage Calculator
Estimate the monthly payment, total interest, and total cost of a fixed-rate mortgage.
The Mortgage Calculator estimates the monthly payment on a repayment home loan from three inputs: the amount borrowed, the annual interest rate, and the term in years. Behind that simple form sits the standard amortisation formula used by banks worldwide, which spreads principal and interest across every scheduled payment so the balance reaches exactly zero on the final month. Understanding the output matters more than producing it: the same monthly figure can hide wildly different total interest costs depending on term length, and small rate differences compound into tens of thousands over thirty years. This page shows the formula, defines every variable, walks through a full worked example, and explains what the number does and does not include.
How to use this calculator
- Enter the loan amount — the home price minus your down payment.
- Enter the annual interest rate as a percentage (for example 6.5, not 0.065).
- Enter the term in years and press Estimate payment.
The formula
M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)- M
- Monthly payment
- P
- Principal (amount borrowed)
- r
- Monthly interest rate = annual rate ÷ 12 ÷ 100
- n
- Total number of monthly payments (years × 12)
How it works
A fixed-rate mortgage is amortizing: every monthly payment is identical, but early payments are mostly interest while later payments are mostly principal.
The formula sizes the payment so that, after n payments with interest accruing monthly on the remaining balance, the balance reaches exactly zero.
Worked example
A $300,000 loan at 6.5% for 30 years.
- 1r = 6.5 ÷ 12 ÷ 100 ≈ 0.005417
- 2n = 30 × 12 = 360
- 3M = 300,000 × 0.005417 × (1.005417)³⁶⁰ ÷ ((1.005417)³⁶⁰ − 1)
M ≈ $1,896.20 per month; total interest ≈ $382,633 over the life of the loan.
What the monthly payment actually covers
The figure produced here is principal and interest only — the part of your payment that repays the lender. Most real-world mortgage bills also bundle property taxes, homeowners or buildings insurance, and, where the deposit is small, mortgage insurance. Those escrow items can add twenty to thirty percent on top of the principal-and-interest figure, so treat this result as the loan cost rather than the full housing cost.
In the early years the majority of each payment goes to interest, because interest is charged on a large outstanding balance. As the balance falls, the interest share falls with it and the principal share grows. The payment stays level, but its composition shifts steadily, which is why overpaying early saves far more interest than overpaying late.
How term length changes the arithmetic
Lengthening the term lowers the monthly payment but raises total interest, often dramatically. A thirty-year loan spreads repayment across 360 months, so each instalment is small, but the balance stays high for longer and accrues interest for longer. A fifteen-year loan on the same principal typically costs forty to fifty percent more per month while cutting lifetime interest by more than half.
Run both scenarios through the calculator before committing. The right choice depends on cash-flow security rather than arithmetic alone: a shorter term is cheaper overall but leaves less monthly headroom if income drops or rates reset.
Rates, resets, and what to enter
Enter the nominal annual rate quoted by the lender, not the APR, unless you specifically want to approximate the effect of fees. The calculator divides that annual rate by twelve to obtain the monthly periodic rate, which is the convention used by most fixed-rate mortgage contracts.
For variable or tracker loans, the payment is only valid for the current rate period. Model a rate rise by re-running the calculation with the higher rate and the remaining balance and term, which is a realistic stress test many borrowers skip.
Costs the payment figure does not include
The number this calculator returns is principal and interest only. Most households also pay property tax, buildings insurance, and — where the deposit is small — mortgage insurance, each billed separately or collected through an escrow account.
Leasehold flats and managed developments add service charges and ground rent, and every property carries maintenance. A common planning rule is to set aside roughly 1% of the property value each year for upkeep, more for older buildings.
Budget on the all-in monthly figure, not the principal-and-interest figure. The gap between the two is frequently 20-30% of the payment, and it is the single most common reason a mortgage that looked affordable on paper feels tight in practice.
How much of each payment is interest
In an amortising loan the payment is level but its split changes every month. Early on, most of it is interest, because interest is charged on a large outstanding balance; late on, almost all of it is principal.
On a 300,000 loan at 6.5% over 30 years, the first payment is roughly 1,625 interest and 271 principal. By year 20 the split has reversed. This is why overpaying early saves far more than overpaying late.
It also explains why selling or refinancing after a few years leaves the balance barely moved — the schedule front-loads the lender's return, not your equity.
Deposit size, loan-to-value, and the rate you are offered
Lenders price by loan-to-value band. Crossing below 90%, 80%, or 75% typically unlocks a lower rate, so a slightly larger deposit can cut the rate as well as the balance — a double saving.
Run the calculator twice, once at each deposit level, and compare both the monthly payment and the total interest. The difference is often larger than people expect and can justify delaying a purchase by a few months.
A smaller deposit may also trigger mortgage insurance, which adds a monthly cost that does not reduce your balance at all.
Overpayments and the effect on total interest
An overpayment reduces the balance immediately, so every future interest charge is calculated on a smaller figure. The saving compounds for the remaining life of the loan.
Adding 200 a month to a 300,000 loan at 6.5% typically shortens a 30-year term by around six years and saves well over 100,000 in interest. Check your lender's annual overpayment allowance first, as fixed deals often cap it at 10% of the balance.
The alternative — keeping the term and taking the lower payment after a remortgage — reduces monthly pressure but keeps you paying interest for longer.
Fixed, tracker, and what happens at the end of a deal
A fixed rate locks the payment for an initial period, usually two to ten years. A tracker moves with a reference rate, so the payment changes when that rate does.
When a fixed period ends the loan usually reverts to the lender's standard variable rate, which is normally higher. Model the reversion rate as well as the headline rate so you know your worst-case payment.
Stress-test by re-running the calculation two or three percentage points higher. If that payment would be unaffordable, the deal is riskier than the headline figure suggests.
Glossary and sanity checks
Principal: the amount borrowed. Term: the number of years to repay. Amortisation: the schedule that repays principal and interest in level payments. LTV: loan as a percentage of property value. APR/APRC: the rate including certain fees.
Sanity check the total interest: on a 30-year loan at typical rates it is often close to the amount borrowed. If the calculator reports far less, check whether you entered a monthly rate where an annual rate belongs.
Sanity check the payment: multiply it by the number of months and confirm it exceeds the loan amount by the reported interest.
Fixed periods, reversion rates, and remortgaging
Most mortgages fix the rate for an initial period and then revert to a much higher standard rate. Planning only around the fixed payment understates what the loan costs if you stay put after it ends.
Remortgaging near the end of a fixed term usually beats reverting, but arrangement fees, valuation costs, and legal charges have to be weighed against the rate saving.
Lenders assess affordability against a stressed rate higher than the one offered, so the amount you can borrow is set by a payment larger than the one you will actually make at first.
Keeping a note of the fixed-period end date months in advance leaves time to compare offers rather than drifting onto the reversion rate by default.
Deposit size and loan-to-value bands
Rates are tiered by loan-to-value, and crossing below a band boundary such as ninety, eighty, or sixty percent typically unlocks a visibly better rate.
A small additional deposit that moves you into a lower band can therefore save far more than the same amount paid off later in the term.
As the balance falls and the property value changes, your loan-to-value improves automatically, which is often the strongest argument for remortgaging.
Estimate the property value conservatively, since a lender's valuation can come in lower and push you back into a worse band.
Stress-testing the payment
Run the numbers at a rate two or three points above the current offer to see whether the payment would still be manageable after a fixed period ends.
Include the running costs a mortgage does not cover: buildings insurance, service charges, ground rent, and a maintenance reserve of roughly one percent of the property value each year.
A payment that consumes more than about a third of take-home pay leaves little room for rate rises or income interruption.
Model the effect of one income dropping temporarily, since that scenario is more common than a rate shock and harder to recover from.
When this calculator is useful
- Comparing 15-year vs 30-year terms
- Estimating affordability before talking to a lender
- Seeing how rate changes affect the payment
- Estimating total interest cost
Frequently asked questions
Why is so much of the early payment interest?
Interest each month is charged on the outstanding balance. At the start the balance is largest, so the interest share is largest.
How much does a 15-year term save?
The monthly payment rises roughly 40–50%, but total interest typically falls by more than half because the balance shrinks much faster.
Does this include taxes and insurance?
No. Add your estimated property tax, insurance, and any PMI to the result for a realistic housing budget.
How much does one extra payment a year save?
Typically several years off a thirty-year term and a large share of lifetime interest, because every extra dollar goes straight against principal and stops accruing interest immediately. The exact saving depends on rate and remaining term.
Why is so much of my early payment interest?
Interest is charged on the outstanding balance, which is at its highest at the start. As principal is repaid, the interest portion shrinks and the principal portion grows, even though the total payment stays constant.
Should I enter the rate or the APR?
Enter the nominal interest rate for an accurate payment figure. APR bundles fees into a comparison rate and will overstate the monthly payment slightly if used here.
Is a shorter term always better?
Financially it costs less overall, but it commits you to a higher monthly payment. If that payment leaves no buffer for emergencies, a longer term with voluntary overpayments gives similar savings with more flexibility.
Are my figures stored anywhere?
No. The calculation runs entirely in your browser. Nothing you type is transmitted, logged, or saved on any server.
Does this include property tax and insurance?
No. It calculates principal and interest only. Add tax, insurance, and any service charges separately to get your true monthly cost.
How much does a 1% rate difference cost?
On a 300,000 30-year loan, roughly 190 a month and about 68,000 over the full term — which is why shopping the rate matters.
Should I choose a 15-year or 30-year term?
A 15-year term costs far more each month but dramatically less in total interest. Choose the shortest term whose payment you can comfortably sustain.
Why is so little of my early payment reducing the balance?
Interest is charged on the outstanding balance, which is at its largest at the start, so early payments are mostly interest.
Is overpaying better than saving the money?
Compare your mortgage rate with the after-tax return on savings. Overpaying wins when the mortgage rate is higher, but keep an emergency fund first.
What happens when my fixed rate ends?
The loan reverts to the lender's standard variable rate, which is usually much higher. Compare remortgage offers a few months before that date.
Why does a bigger deposit cut the rate so much?
Rates are banded by loan-to-value, so crossing below a band boundary moves you into a cheaper tier.
What rate should I stress-test at?
Two to three percentage points above the offered rate is a reasonable check on affordability.