Mortgage Calculator — Calculate Monthly Payments
A mortgage is the largest financial commitment most people make. Understanding the monthly payment, total interest cost, and how different rates and terms affect the total amount paid is essential before committing. The free mortgage calculator on PublicSoftTools computes monthly payments, total interest, and an amortisation schedule showing how much of each payment goes to capital vs. interest over time.
How to Use the Mortgage Calculator
- Open the mortgage calculator.
- Enter the property price and deposit amount (or percentage). The loan amount is property price minus deposit.
- Enter the interest rate (annual percentage rate).
- Enter the mortgage term in years (typically 25 or 30 years).
- Results show monthly payment, total amount paid, and total interest over the term.
- Use the amortisation schedule to see year-by-year capital/interest split and remaining balance.
Types of UK Mortgages
| Type | How it works | Pros | Cons | Best for |
|---|---|---|---|---|
| Fixed rate | Interest rate fixed for an initial period (2, 3, 5, or 10 years) then reverts to SVR | Payment certainty; immune to rate rises during fix period | Higher initial rate than trackers; early repayment charges if you leave during fixed period | First-time buyers wanting payment certainty; those concerned about rate rises |
| Tracker | Tracks the Bank of England base rate + a fixed margin (e.g., base rate + 0.5%) | Payments fall when rates fall; often lower initial rate than fixed; typically lower ERCs | Payment uncertainty; exposed to rate rises immediately | Borrowers comfortable with rate risk expecting rates to fall; short-term holders |
| Standard Variable Rate (SVR) | Lender's default rate when a fix or tracker period ends; not linked to any index | No ERCs; full flexibility to overpay or switch | Typically the most expensive rate; can change at lender's discretion | Not recommended as a deliberate choice; most switch before landing on SVR |
| Offset | Savings balance held with the same lender reduces the mortgage balance interest is calculated on | Interest savings on mortgage effectively earning the mortgage rate on savings tax-free | Higher rates than standard deals; requires significant savings balance to be worthwhile | Higher earners with significant savings; self-employed with variable income |
| Interest-only | Monthly payments cover interest only; capital balance unchanged until term end | Much lower monthly payments; useful for BTL investment properties | Capital must be repaid at term end; requires credible repayment strategy | Buy-to-let investors; high earners planning to use bonuses/investments to repay capital |
Amortisation: How Your Payments Split Over Time
In a repayment mortgage, each monthly payment is split between interest (calculated on the outstanding balance) and capital (reducing the balance). Early in the mortgage, most of each payment is interest; later, most is capital. This is mortgage amortisation — approximate example for £250,000 at 4.9%, 25-year term (monthly payment ~£1,440):
| Year | Opening balance | Annual interest | Annual capital | Closing balance | Cumulative interest paid |
|---|---|---|---|---|---|
| Year 1 | £250,000 | £12,250 | £3,842 | £246,158 | £12,250 |
| Year 5 | £234,000 | £11,466 | £4,626 | £229,374 | £58,750 |
| Year 10 | £213,000 | £10,437 | £5,655 | £207,345 | £111,890 |
| Year 15 | £186,000 | £9,114 | £6,978 | £179,022 | £157,440 |
| Year 20 | £152,000 | £7,448 | £8,644 | £143,356 | £193,530 |
| Year 25 (end) | £8,200 | £398 | £8,200 | £0 | £218,400 |
This example shows that £250,000 borrowed at 4.9% over 25 years costs approximately £218,000 in total interest — nearly equal to the original loan. Total amount paid: ~£433,000. This is why the interest rate and term both matter enormously.
The Mortgage Formula
Monthly repayment mortgage payment is calculated as:
M = P × [r(1+r)^n] / [(1+r)^n − 1]
Where:
- M = Monthly payment
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of monthly payments (years × 12)
Example: £200,000 at 5% over 25 years: r = 5%/12 = 0.4167%/month; n = 300 payments. Monthly payment = £200,000 × [0.004167 × (1.004167)³⁰⁰] / [(1.004167)³⁰⁰ − 1] = £1,169.
How Deposit Size Affects Your Mortgage
Loan-to-Value (LTV) ratio = loan amount ÷ property value. A lower LTV (higher deposit) typically gives access to better rates:
- 95% LTV (5% deposit): Highest rates; limited product choice; government schemes may be needed
- 90% LTV (10% deposit): More products available; rates improve meaningfully from 95%
- 85% LTV: Further rate improvement
- 75% LTV (25% deposit): Good rates across most lenders
- 60% LTV (40% deposit): Best available rates; used as benchmark for comparison
Example: On a £300,000 property, a 10% deposit (£30,000, LTV 90%) might give a rate of 5.2%. A 25% deposit (£75,000, LTV 75%) might give 4.5%. On a £270,000 mortgage over 25 years, that difference is approximately £90/month or £27,000 over the term.
Overpaying Your Mortgage
Making overpayments (paying more than the required monthly amount) reduces the outstanding balance faster, which reduces total interest paid:
- Most fixed-rate mortgages allow overpayments of up to 10% of the outstanding balance per year without early repayment charges (ERCs)
- An extra £100/month on a £200,000 25-year mortgage at 5% saves approximately £22,000 in interest and reduces the term by about 3 years
- Check your mortgage terms for overpayment limits before making regular overpayments — exceeding the limit triggers ERCs
- Offset mortgages provide an alternative to overpaying — your savings reduce the interest without committing the funds permanently
Common Questions
What is the difference between fixed rate and APR?
The fixed rate is the interest rate for the initial deal period (e.g., 2 years at 4.75%). The Annual Percentage Rate (APR) reflects the true annual cost including all fees spread over the full mortgage term — it allows comparison between mortgages with different fee structures. A mortgage with a low rate but high arrangement fee may have a higher APR than one with a slightly higher rate but no fees. For long mortgages where you plan to remortgage after the fixed period, comparing initial rates rather than APR is often more practical.
Should I take a 2-year or 5-year fixed rate?
This depends on your view of future interest rate direction and your plans for the property:
- 2-year fix: More flexibility to remortgage sooner; typically lower initial rate; appropriate if you expect rates to fall or plan to move within 2–3 years
- 5-year fix: Longer payment certainty; typically a slightly higher rate; appropriate if you want stability and expect rates to stay the same or rise
As of 2026, the conventional wisdom has shifted multiple times — always check current market conditions and consider speaking with a fee-free mortgage broker who can compare products across lenders.
How much can I borrow?
Lenders typically offer 4–4.5× annual income as a maximum loan amount, subject to affordability assessment. The affordability test considers all income sources (salary, bonuses, rental income, self-employment profit), all debt commitments (existing loans, credit cards, maintenance payments), and stress tests the mortgage at higher interest rates. The calculator can show what monthly payment different loan amounts require — use this alongside your monthly budget to determine a comfortable borrowing level, not just the maximum a lender offers.
Calculate Your Mortgage
Enter loan amount, interest rate, and term to see monthly payments, total interest, and year-by-year amortisation. Free, instant, no signup.
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