Mortgage Repayment Calculator

The mortgage repayment calculator above estimates your monthly payment from three numbers:

• how much you borrow
• the interest rate
• the length of the mortgage

This guide explains how repayments are worked out and what moves them up or down. Small changes can save you thousands over the life of the loan. A slightly better rate, a shorter term, or regular overpayments all help.

How mortgage repayments are calculated

A standard repayment mortgage is designed so that you pay it off completely by the end of the term. Each monthly payment covers two things. It pays the interest charged on what you still owe. It also pays off a slice of the capital, the amount borrowed. In the early years most of your payment goes on interest. As the balance falls, more goes on capital. This is why overpaying early in a mortgage is so powerful. It cuts the balance that interest is charged on for the rest of the term.

The monthly payment depends on how the loan size, the rate and the term interact. A larger loan or a higher rate increases the payment. A longer term reduces the monthly payment but increases the total interest you pay over the years.

The three levers that change your payment

Worked example: a £200,000 mortgage

Imagine borrowing £200,000 over 25 years. At a 5% interest rate, the monthly repayment is roughly £1,170. Over the full term you would repay around £350,000 in total. About £150,000 of that is interest. Stretch the same loan to 30 years and the monthly payment falls to around £1,074. But the total interest rises significantly, because you are borrowing for five more years. Shorten it to 20 years and the monthly payment rises to about £1,320. In return, you save tens of thousands in interest. The calculator lets you test each of these instantly.

Why the interest rate matters so much

Even a small change in rate has a large effect over decades. On a £200,000 mortgage, the difference between 4.5% and 5.5% can be well over £100 a month. Across the term, it adds up to tens of thousands. So shop around at the end of a fixed-rate deal. Do not slip onto your lender's standard variable rate. It is one of the most valuable things a homeowner can do. UK mortgage rates are influenced by the Bank of England base rate. But lenders set their own pricing, so it pays to compare.

The power of overpayments

Overpaying means paying more than your required monthly amount. The extra goes straight off the capital. That reduces both the balance and all the future interest on it. On a £200,000 mortgage at 5%, overpaying just £100 a month can cut years off the term. It can also save a five-figure sum in interest. Most lenders let you overpay up to 10% of the balance each year without penalty. You should still check your specific deal. Even occasional lump-sum overpayments, such as from a bonus, make a meaningful difference.

Repayment versus interest-only

Most residential mortgages are repayment mortgages. Each payment chips away at the capital, so the debt is cleared by the end. Interest-only mortgages are more common with buy-to-let. They have lower monthly payments because you only pay the interest. But the full capital is still owed at the end. You must repay it from savings, a sale, or another plan. For most homeowners, a repayment mortgage is the safer choice. It guarantees the loan is paid off.

What else to budget for

Your mortgage payment is not the only cost of owning a home. Buyers also need to budget for:

• the deposit
• Stamp Duty (or its Scottish and Welsh equivalents)
• valuation and legal fees
• buildings insurance
• ongoing maintenance

If you are buying, work out your likely Stamp Duty with our stamp duty calculator. First-time buyers can check their relief with the first-time buyer stamp duty calculator.

Fixed, variable and tracker rates

The type of mortgage rate you choose affects both your payment and your certainty. A fixed rate locks your interest rate for a set period, commonly two or five years. Your payment stays the same even if market rates rise. That is valuable for budgeting, though you may pay a slightly higher rate for the security. A variable rate can move up or down at the lender's discretion. A tracker follows the Bank of England base rate plus a set margin. Trackers and variable rates can be cheaper when rates are falling. But they expose you to rises. Most homeowners who value predictability choose a fix. When it ends, they remortgage to a new deal rather than slipping onto the lender's more expensive standard variable rate.

What affects the rate you are offered

Two borrowers with the same loan can be offered very different rates. The biggest factor is your loan-to-value (LTV). That is the size of the loan relative to the property's value. A larger deposit means a lower LTV and access to better rates. The cheapest deals are usually reserved for those borrowing 60% or less of the value. A 95% mortgage carries a higher rate. Your credit history also matters. So does your income relative to the loan (affordability), and the lender's view of the property. Improve your deposit and your credit profile before applying. That can move you into a cheaper band and save a substantial amount over the term.

A worked overpayment example

Overpayments are worth illustrating because the effect surprises people. Take a £200,000 repayment mortgage over 25 years at 5%. Pay an extra £150 a month on top of the normal payment. That can shorten the term by several years and save well over £20,000 in interest. Every overpaid pound reduces the balance that future interest is charged on. The earlier in the mortgage you overpay, the bigger the saving. Interest in the early years is charged on the largest balance. Even irregular lump sums, such as a bonus or an inheritance, make a real dent. Just check your lender's annual overpayment limit, commonly 10%, to avoid early repayment charges.

How much can you borrow?

Lenders decide how much you can borrow mainly on affordability, not a single fixed multiple. They look at your income, your regular outgoings and your existing debts. As a rough guide, many lenders cap borrowing at around four to four-and-a-half times your annual income. This varies with your circumstances and the lender. They also "stress test" your application. They check you could still afford the payments if interest rates rose. This is why the rate environment affects how much you are offered. Three things improve both how much you can borrow and the rate you are offered:

• reducing other debts
• avoiding new credit in the months before you apply
• having a larger deposit

Work out a comfortable monthly payment first. Then check that the loan it supports fits within these affordability limits.

Remortgaging and switching deals

Switching deals is one of the most valuable habits a homeowner can have. Move to a new deal when a fixed or introductory rate ends. Do not let the mortgage roll onto the lender's standard variable rate. It is usually much more expensive. Remortgaging can lock in a better rate and keep your payments down. You can stay with your current lender (a product transfer) or move to a new one. Start looking a few months before your current deal expires, as offers can be reserved in advance. Factor in any arrangement fees when comparing. The cheapest headline rate is not always the cheapest overall once fees are included. Over the life of a mortgage, switching promptly each time a deal ends can save many thousands of pounds. Set a reminder for a few months before your current rate expires. That way you never drift onto the standard variable rate by accident. Treat each renewal as a chance to shop around, not a formality.

How to use the results

Try a few combinations in the calculator above. See what monthly payment you can comfortably afford. Then work backwards to the loan size and deposit that produce it. Test what a 1% rate rise would do. You will know you could still cope if rates climb when your fixed deal ends. And model a modest overpayment to see how much interest and time you could save. These quick checks turn an abstract number into a plan you can act on.

Key takeaways

• Your monthly payment is driven by the loan amount, the interest rate and the term.
• A longer term lowers the monthly payment but increases total interest paid.
• Even a 1% difference in rate can cost or save tens of thousands over the term.
• Overpayments come straight off the capital. They can save years and a large sum in interest.
• Budget for the deposit, Stamp Duty, fees, insurance and maintenance on top of the mortgage.

This calculator gives an estimate for guidance only. It is not a mortgage offer or financial advice. Actual rates and payments depend on your lender, credit profile and circumstances. Speak to a mortgage adviser before making decisions.

The numbers: what every £100,000 of mortgage costs

These are monthly repayments per £100,000 borrowed, using the standard repayment formula lenders use. Multiply for your own loan size. A £250,000 mortgage costs 2.5 times these figures.

The repayment formula behind the calculator:

Rates move with the Bank of England base rate. Check the current base rate and free guidance from MoneyHelper (the government-backed money service).