Mortgage Calculator

How this is worked out

A repayment mortgage uses one standard formula. Each month you are charged interest on whatever you still owe, and whatever is left of your payment reduces the balance:

monthly payment = P × r ÷ (1 − (1 + r)^−n)

P is the amount borrowed, r is the annual rate divided by 12, and n is the number of months in the term.

In the early years most of your payment is interest, because the balance is large. That flips over time. This is why overpaying early is worth far more than overpaying later — every extra unit of currency you put in now removes interest for every remaining month.

When you enter an overpayment, this page does not use a shortcut formula. It simulates the loan month by month until the balance reaches zero, which gives the exact payoff date rather than an estimate.

A worked example

Borrow 300,000 over 25 years at 4.5%:

• Monthly payment: about 1,668
• Total interest: about 200,000

Now add 200 a month on top. The payment becomes 1,868, but the loan clears in roughly 20 years and 5 months instead of 25 — and the total interest falls by around 43,000. You paid in an extra 200 a month for 20 years (about 49,000) and saved 43,000 of interest, while owning the house outright four and a half years sooner.

What this doesn't cover

• This is the interest and capital only. It does not include buildings insurance, property tax, service charges, or mortgage protection insurance.
• It assumes a fixed rate for the whole term. If your rate is fixed for two or five years and then reverts, run it twice: once at the fixed rate, once at the rate you fear reverting to.
• Many lenders cap annual overpayments (10% of the balance is common) and charge a fee above that. Check your own terms before committing.
• Interest is treated as compounding monthly, which matches most lenders but not all. Yours may differ by a small amount.

Common questions