Calculate your monthly mortgage payment, total interest, and full amortisation schedule.
A mortgage payment consists of four components, often abbreviated as PITI: Principal (the portion that reduces your loan balance), Interest (the cost of borrowing), Taxes (property taxes, typically escrowed by the lender), and Insurance (homeowner's insurance, also typically escrowed). If your down payment is less than 20%, you will also pay PMI (Private Mortgage Insurance) until you reach 20% equity.
In the early years of a mortgage, the vast majority of your payment goes toward interest rather than principal. On a 30-year mortgage at 6.5%, approximately 85% of your first payment is interest. This proportion gradually shifts over time — by year 25, more than half of each payment goes toward principal. This is why making extra principal payments early in a mortgage has an outsized impact on total interest paid.
The choice between a 15-year and 30-year mortgage is one of the most consequential financial decisions a homebuyer makes. A 15-year mortgage has a higher monthly payment but a significantly lower interest rate (typically 0.5–0.75% lower) and pays off the loan in half the time, saving tens of thousands in interest. A 30-year mortgage has a lower monthly payment, providing more cash flow flexibility, but costs substantially more over the life of the loan.
| Loan: $320,000 | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 30-Year at 6.75% | $2,076 | $427,360 | $747,360 |
| 15-Year at 6.00% | $2,703 | $166,540 | $486,540 |
| Difference | +$627/month | -$260,820 interest | -$260,820 total |
The traditional rule of thumb is that your total housing costs (PITI) should not exceed 28% of your gross monthly income, and your total debt payments (including housing) should not exceed 36%. This is the 28/36 rule. However, in high-cost cities, many homeowners spend 35–40% of income on housing — which is manageable if other expenses are low, but leaves little margin for savings or emergencies.
A more conservative approach is to target a home price no more than 3–4x your annual household income. On a $100,000 household income, this means a $300,000–$400,000 home. This leaves room for a comfortable down payment, emergency fund, and retirement contributions — the foundation of long-term financial health.
The Mortgage Calculator is a free online tool that calculates your monthly mortgage payment, total interest paid, and full amortisation schedule for any home loan. With 135,000 monthly searches, mortgage calculation is one of the most important financial calculations most people will ever make. Understanding your mortgage payments, the impact of different interest rates, and how extra payments can save tens of thousands in interest is essential knowledge for every homebuyer.
Enter the home price and your deposit amount to calculate the loan amount.
Enter the annual interest rate (APR) offered by your lender.
Select the loan term — typically 25 or 30 years for residential mortgages.
The calculator displays your monthly payment, total interest paid, and total cost of the loan.
Use the extra payment feature to see how overpaying reduces your loan term and interest cost.
Review the amortisation schedule to see how each payment splits between principal and interest over time.
A mortgage payment consists of two components: principal (repayment of the loan amount) and interest (the cost of borrowing). In the early years of a mortgage, the vast majority of each payment goes towards interest, with only a small fraction reducing the principal. This is called amortisation — the gradual reduction of the loan balance over time.
For example, on a £250,000 mortgage at 4.5% over 25 years, the monthly payment is approximately £1,389. In the first month, approximately £938 goes to interest and only £451 reduces the principal. By year 20, the split reverses — most of each payment goes to principal. This is why making extra payments in the early years of a mortgage has such a dramatic effect on the total interest paid.
The formula for calculating monthly mortgage payments is: M = P[r(1+r)^n]/[(1+r)^n-1], where P is the principal loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments (years × 12). This calculator applies this formula automatically.
The most powerful mortgage saving strategy is making regular overpayments. On a £250,000 mortgage at 4.5% over 25 years, paying an extra £200/month reduces the loan term by approximately 5 years and saves approximately £28,000 in interest. This is because extra payments directly reduce the principal, which reduces the interest charged in all subsequent months.
Most UK mortgages allow overpayments of up to 10% of the outstanding balance per year without penalty. Check your mortgage terms before making overpayments, as some fixed-rate mortgages charge early repayment penalties for overpayments above this threshold.
Remortgaging — switching to a new mortgage deal — is another major saving opportunity. Most fixed-rate mortgage deals last 2–5 years, after which you revert to the lender's Standard Variable Rate (SVR), which is typically 1–2% higher than the best available deals. Remortgaging at the end of each fixed-rate period to the best available rate can save thousands per year.
A larger deposit reduces your loan-to-value (LTV) ratio, which typically unlocks lower interest rates. Moving from 90% LTV to 85% LTV can reduce your interest rate by 0.25–0.5%, saving thousands over the mortgage term.
A lower monthly payment from a longer mortgage term costs significantly more in total interest. Always compare the total cost of the loan (principal + total interest) when evaluating mortgage options.
When your fixed-rate deal ends, you automatically move to the lender's SVR, which is typically 1–2% higher. Set a reminder 3 months before your deal ends to compare and switch to a new deal.
Even small regular overpayments (£50–£200/month) significantly reduce the loan term and total interest paid. Use this calculator to model the impact of different overpayment amounts.
Mortgage brokers have access to deals not available directly to consumers and can compare hundreds of products simultaneously. Their fee is often offset by the better rate they secure.
A mortgage in principle (also called an agreement in principle) shows sellers you are a serious buyer and confirms the amount you can borrow. It makes your offer more credible in competitive markets.