Help calculate your expected mortgage payments with this mortgage repayment calculator to see what your monthly mortgage payments may be. Compare the impact across various mortgage inputs such as mortgage rate, amortization period and payment frequency. This guide will help you understand how repayments work, how to compare options, and how to pay off your mortgage faster.
How Are Mortgage Repayments Calculated?
Mortgage repayments are calculated using a standard formula that takes into account the loan amount, interest rate, and term. For repayment mortgages, each monthly payment covers both interest and a portion of the principal, so your balance reduces over time.
Repayment formula:
M = P[r(1+r)^n] / [(1+r)^n – 1]
Where:
- M = monthly payment
- P = principal (amount borrowed)
- r = monthly interest rate (annual rate ÷ 12)
- n = total number of payments (years × 12)
Example: If you borrow £200,000 at 5% over 25 years:
- P = £200,000
- r = 0.05 ÷ 12 = 0.004167
- n = 25 × 12 = 300 Monthly payment ≈ £1,169
Mortgage Repayment Comparison Table
The table below shows monthly payments for different loan amounts, interest rates, and terms (repayment mortgages):
| Loan Amount | 3% (25 yrs) | 4% (25 yrs) | 5% (25 yrs) | 6% (25 yrs) |
|---|---|---|---|---|
| £100,000 | £474 | £528 | £585 | £644 |
| £150,000 | £711 | £791 | £877 | £966 |
| £200,000 | £948 | £1,055 | £1,169 | £1,288 |
| £300,000 | £1,422 | £1,583 | £1,754 | £1,932 |
Note: Figures are approximate and for illustration only.
Repayment vs Interest-Only Mortgages: Pros and Cons
There are two main types of mortgage repayment in the UK: capital repayment and interest-only. Each has its own advantages and drawbacks.
Capital Repayment Mortgage: You pay off both the interest and the loan amount each month. At the end of the term, your mortgage is fully paid off.
Pros:
- Guaranteed to be mortgage-free at the end
- Pay less interest overall
- Lower risk for both you and the lender
Cons:
- Higher monthly payments compared to interest-only
Interest-Only Mortgage: You only pay the interest each month. The original loan amount must be repaid in full at the end of the term.
Pros:
- Lower monthly payments
- More flexibility for investors or those expecting a lump sum
Cons:
- Must have a plan to repay the capital at the end
- Pay more interest overall
- Higher risk if investments underperform
Tips for Paying Off Your Mortgage Faster
If you want to reduce your total interest and become mortgage-free sooner, consider these strategies:
- Make regular overpayments (check your lender’s limits)
- Choose a shorter mortgage term if you can afford higher payments
- Remortgage to a lower interest rate when possible
- Review your budget to find extra savings for overpayments
Even small extra payments can make a big difference over time.
Frequently Asked Questions
What’s the difference between repayment and interest-only mortgages? Repayment mortgages pay off both the loan and interest; interest-only pays just the interest, with the loan due at the end.
Can I switch from interest-only to repayment? Yes, but you’ll need to meet your lender’s criteria and may face higher payments.
How can I reduce my monthly payments? Extend your mortgage term, remortgage to a lower rate, or switch to interest-only (if eligible).
Are there penalties for overpaying? Many lenders allow up to 10% overpayment per year without penalty, but always check your terms.
How accurate is this calculator? It provides a good estimate, but your actual payments may vary depending on your lender and circumstances.
How to use this mortgage repayment calculator
This mortgage repayment calculator is a useful tool to help you estimate what your monthly mortgage repayment may be in addition to checking the impact inputs such as mortgage rates and loan term have on your monthly payment. You can also see the difference between interest-only and capital repayment mortgages.
What are the two common mortgage repayment types
When talking about mortgages in the UK there are two main repayment types, the first is a capital repayment mortgage and the second is a interest only mortgage payment.
A capital repayment loan is one where mortgage payments made pay off the principal or capital on the loan you borrowed over the amortization period in addition to paying interest on the outstanding amount borrowed.
Where an interest only mortgage payment just pays for interest on the loan that is borrowed and does not look to repay any of the capital that was borrowed. Typically the capital borrowed is repaid at the end of the loan term.