Mortgage Calculator
A mortgage quote is one monthly figure produced from three inputs: how much you borrow, the interest rate, and how long you take to repay it. This calculator shows all three effects at once, including the total interest most quotes leave out.
Formula
M = P × [ i(1+i)ⁿ ] ÷ [ (1+i)ⁿ − 1 ]
- M = monthly payment
- P = amount borrowed
- i = annual rate ÷ 12
- n = term in months
£200,000 over 25 years at 5%: £1,169 a month
How the Repayment Is Calculated
Lenders use the standard amortisation formula:
M = P × [ r(1 + r)n ] ÷ [ (1 + r)n − 1 ]
Where P is the amount borrowed, r is the monthly interest rate (annual rate divided by 12) and n is the number of monthly payments (years × 12).
Example: a £280,000 house with a £42,000 deposit, over 25 years at 4.5%, gives a monthly payment of £1,322.88 and total interest of £158,864.
Why the Term Costs More Than It Looks
Extending the term is the usual way to lower a monthly payment, and it works — but the total cost rises sharply. On that same £238,000 at 4.5%:
- 25 years: £1,322.88 a month, £158,864 interest
- 30 years: £1,205.91 a month, £196,128 interest
Five extra years saves £117 a month and costs £37,264. Both numbers matter; only one appears on the offer.
What This Calculator Does Not Include
The figure is arithmetic, not a forecast. It assumes one fixed rate for the whole term, whereas most UK mortgages fix for two or five years and then revert. It also excludes buildings insurance, service charges, product fees, and stamp duty. Treat long-range interest totals as an illustration for comparing options, not a prediction of what you will pay.
Quick Reference
| Rate | 20 years | 25 years | 30 years |
|---|---|---|---|
| 3% | £1,109 | £948 | £843 |
| 4% | £1,212 | £1,056 | £955 |
| 5% | £1,320 | £1,169 | £1,074 |
| 6% | £1,433 | £1,289 | £1,199 |
| 7% | £1,551 | £1,414 | £1,331 |
Frequently Asked Questions
- How much deposit do I need?
- Most UK lenders want at least 5%, but rates improve noticeably at 10%, 15% and 25%. A larger deposit lowers both the amount borrowed and usually the rate applied to it.
- Should I choose a shorter or longer term?
- A shorter term costs more each month and far less overall. Use the calculator to price both: the difference in total interest between 25 and 30 years is often more than £35,000.
- Does overpaying actually help?
- Yes, and disproportionately early on, when most of your payment is interest. Most lenders allow overpayments of up to 10% of the balance per year without penalty, but check for early repayment charges.
- Why does my lender quote a slightly different figure?
- This calculator compounds monthly. Many lenders calculate interest daily, which shifts the payment by a small amount, and any product fee added to the loan changes the principal.