Mortgage Repayment Calculator

How the mortgage repayment calculator works

A capital repayment mortgage is repaid in equal monthly instalments over a fixed term. Each payment covers the interest accrued that month plus a portion of the outstanding capital. The proportion shifts over time: early in the term most of each payment is interest; as the balance falls, the interest portion shrinks and more goes towards repaying the principal. By the final payment, the mortgage is fully cleared.

The amortisation formula

The calculator uses the standard mortgage amortisation formula to derive the monthly payment:

Monthly payment = P x [r(1 + r)^n] / [(1 + r)^n - 1]

where P is the loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (years multiplied by 12). This formula produces the fixed payment that, applied every month, exactly repays both principal and interest by the end of the term.

How interest and capital split over time

In the early years, a large share of each monthly payment is interest rather than capital. This is normal and expected: the interest charged each month is proportional to the remaining balance, which is highest at the start. As you make payments, the balance falls, interest charges shrink, and the capital portion of each payment grows. This is why making overpayments early in the mortgage term produces the largest interest savings over time.

What the calculator does not include

The calculation assumes a fixed interest rate throughout the term. It does not account for arrangement fees, valuation fees, solicitor costs, or mortgage insurance. It also does not model tracker or variable rates, which change in line with the Bank of England base rate. If you are on a variable rate, the monthly payment shown is accurate only while the rate remains as entered.

Worked example

You borrow £250,000 over 25 years at 4.5% per annum.

Monthly rate: 4.5% / 12 = 0.375% (0.00375) Number of payments: 25 x 12 = 300

Monthly payment = 250,000 x [0.00375 x (1.00375)^300] / [(1.00375)^300 - 1] = 250,000 x [0.00375 x 3.074] / [3.074 - 1] = 250,000 x 0.011528 / 2.074 = approximately £1,390 per month

Total amount repayable: £1,390 x 300 = £417,000. Total interest: £167,000. The interest represents 40% of the total cost, illustrating how significantly the rate and term affect the true cost of borrowing. Running the same mortgage at a 25-year term versus a 20-year term would reduce total interest by roughly £30,000 but increase the monthly payment by around £220.

Frequently asked questions

What is the difference between a repayment and interest-only mortgage?

On a repayment mortgage, each monthly payment reduces the outstanding balance so the mortgage is fully repaid at the end of the term. On an interest-only mortgage, monthly payments cover only the interest, leaving the full original loan to be repaid at the end of the term via a separate repayment vehicle. Most residential mortgages in the UK are repayment mortgages.

Does this calculator work for fixed-rate and tracker mortgages?

The calculator works for both, but it assumes the rate you enter stays constant for the full term. For a fixed-rate mortgage this is accurate for the fixed period. For a tracker mortgage the actual payments will vary as the Bank of England base rate changes. Use the calculator to model what your payments would be at different rate scenarios.

How does changing the term affect my repayments?

A longer term reduces the monthly payment but significantly increases the total interest paid over the life of the mortgage. A shorter term increases monthly payments but reduces total interest. The difference can be substantial: on a £250,000 mortgage at 4.5%, moving from a 25-year to a 20-year term adds around £220 to the monthly payment but saves roughly £30,000 in total interest.

Is this calculator suitable for buy-to-let mortgages?

Yes. The mathematics are identical for residential and buy-to-let capital repayment mortgages. Note that buy-to-let mortgages are also commonly offered on an interest-only basis, which this calculator does not cover.

Can I add the arrangement fee to the loan?

Yes, many lenders allow you to add the arrangement fee to the mortgage balance rather than paying it upfront. If you do, enter the total of the loan plus the fee in the loan amount field. Adding the fee to the loan means you pay interest on it for the full term, so the total cost is higher than paying the fee upfront, even though the upfront payment is lower.

What does LTV mean and why does it matter?

Loan-to-value (LTV) is the size of the mortgage expressed as a percentage of the property value. A £200,000 mortgage on a £250,000 property is 80% LTV. Lenders typically offer lower interest rates at lower LTV bands, with the sharpest improvements at 75% and 60%. A lower LTV also provides a buffer against negative equity if property values fall.

What is a standard variable rate (SVR)?

When a fixed-rate or tracker deal ends, most borrowers automatically move onto their lender's SVR. The SVR is set by the lender and is typically higher than introductory deals. It can change at the lender's discretion, independent of the Bank of England base rate. Borrowers on an SVR can usually switch to a new deal at any time without an early repayment charge.

Should I choose a shorter or longer mortgage term?

The right term depends on what you can comfortably afford each month and how much total interest you are willing to pay. A longer term is lower risk if your income is uncertain, because the monthly obligation is smaller. A shorter term saves significant interest but requires higher monthly payments. Some borrowers choose a longer term initially and overpay when possible, retaining the flexibility of the lower required payment.

How much deposit do I need to get a mortgage?

Most lenders require a minimum 5% deposit, though rates at 5% LTV are significantly higher than at 10% or 15%. The largest rate improvements tend to occur at 75% LTV (25% deposit) and 60% LTV (40% deposit). First-time buyers may access government schemes such as shared ownership with smaller deposits.

What happens if I miss a mortgage payment?

A missed payment is recorded on your credit file and can affect your ability to remortgage or borrow in the future. After two or more missed payments, lenders can begin repossession proceedings, though most will first attempt to agree an alternative arrangement. Contact your lender as soon as possible if you are struggling to make payments.

Source: Mortgage repayment mathematics, FCA mortgage rules, Bank of England.

For a guide to choosing between a 2-year and 5-year fixed rate — including how ERCs, SVR rollover, and your circumstances affect the decision — see our article Fix for 2 Years or 5 Years in 2026: How to Decide.

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