Mortgage Calculator UK

How to use this calculator

1. Enter the price and deposit separatelyThe calculator works out the loan and shows your loan-to-value, which is what determines the rate you are offered. LTV bands step at 95%, 90%, 85%, 80%, 75% and 60%, and crossing one is worth real money.
2. Use the rate you have been quotedNot the headline rate in an advertisement, which usually assumes the lowest LTV band and often excludes a product fee that changes the true cost.
3. Try the term both waysExtending from 25 to 30 years lowers the monthly payment and raises total interest substantially. Seeing both numbers together is the point of the exercise.
4. Read the total interest, not just the monthlyThe monthly figure tells you affordability. The total tells you cost. Comparing two products on the monthly figure alone hides which is genuinely cheaper.

Why early payments barely touch the balance

A repayment mortgage has a level monthly payment, but what that payment does changes completely across the term.

Interest each month is charged on the outstanding balance. At the start the balance is at its largest, so most of the payment goes on interest and only a sliver reduces the capital. As the balance falls the interest portion shrinks, so more of the same payment attacks the capital, and the balance falls faster and faster.

On a £225,000 loan at 4.5% over 25 years, the first month's interest is £843.75 out of a payment of about £1,251. Only £407 comes off the balance. By year twenty that has reversed, with the great majority going on capital.

This is why the halfway point in time is nowhere near the halfway point in the balance. After twelve and a half years of a 25-year term, roughly two thirds of the original loan is typically still outstanding.

It is also why overpayments made early are worth far more than the same amount later. An overpayment reduces the balance, and every subsequent month's interest is calculated on that smaller balance — so the saving compounds for the whole remaining term. £5,000 paid in year one saves several times what £5,000 paid in year fifteen does.

And it explains why extending the term does so much damage to total cost. The extra years are years at a high balance, so they are the expensive ones.

Worked example: £250,000 with a 10% deposit

A £25,000 deposit on a £250,000 property leaves a loan of £225,000. That is 90% loan-to-value.

At 4.5% over 25 years, the monthly rate is 4.5% ÷ 12 = 0.375%, and the term is 300 months.

Applying the formula gives a monthly payment of £1,250.62.

Across 300 months that is £375,187 paid in total, of which £150,187 is interest. You repay roughly one and two-thirds times what you borrowed.

Now change the rate to 3.5%. The monthly payment falls to about £1,126 — a saving of £125 a month. But the total interest falls to about £112,700, a saving of £37,500 across the term. The monthly difference looks modest; the lifetime difference does not.

Now change the term instead. Thirty years at 4.5% gives about £1,140 a month, £110 less than the 25-year figure. But total interest rises to roughly £185,300 — £35,000 more. The lower monthly payment costs £35,000.

And raise the deposit to £37,500, taking LTV to 85%. The loan falls to £212,500, and at 85% you would typically be offered a better rate as well. The payment drops on both counts, which is why pushing a deposit over an LTV threshold is usually the highest-value thing a buyer can do.

What the same loan costs at different rates

Each half point costs roughly £19,000 in interest over the term on this loan size. That is the number to hold in mind when a broker fee or a product fee is weighed against a slightly better rate — a fee of £999 to secure a rate 0.25 points lower is comfortably worth paying on a loan of this size, and comfortably not worth it on a small one.

Fixed rates, overpayments and what this cannot model

UK mortgages are almost never fixed for the full term. A two, three or five-year fixed rate is typical, after which the loan reverts to the lender's standard variable rate, which is usually much higher. Most borrowers remortgage at that point onto a new fixed deal.

That means a 25-year projection at a single rate is a comparison tool, not a forecast. It answers "what does this rate cost" rather than "what will I pay". Over a real 25-year mortgage a borrower typically passes through five or six different rates.

Most fixed-rate deals allow overpayments of up to 10% of the balance each year without penalty. Beyond that an early repayment charge applies, typically a percentage of the balance that steps down as the fixed period runs out. The 10% allowance is generous enough that most borrowers who want to overpay can do so freely.

Product fees complicate rate comparisons. A lower rate with a £1,499 fee can be worse than a higher rate with no fee on a small loan, and better on a large one — the fee is fixed while the rate saving scales with the balance. Comparing on total cost over the fixed period, fee included, is the only reliable method.

Interest-only mortgages pay only the interest, leaving the capital outstanding at the end. The monthly payment is much lower but nothing is repaid, and a credible repayment vehicle is required. They are now largely restricted to buy-to-let and high-net-worth lending.

The calculator gives the loan payment alone. Buildings insurance, ground rent and service charges on a leasehold, and the transaction costs of buying are all separate — and on a first purchase the cash needed for stamp duty, legal fees and survey routinely surprises buyers who saved exactly the deposit.

Affordability is assessed by lenders against stressed rates, typically several points above the product rate, so being able to afford today's payment does not guarantee the loan will be offered.

Assumptions and limitations

• Assumes one constant rate for the whole term, whereas UK mortgages typically fix for two to five years
• Repayment basis only — interest-only mortgages work differently
• Excludes product fees, valuation fees, broker fees and legal costs
• Excludes buildings insurance, ground rent and service charges
• Does not model overpayments, payment holidays or offset arrangements
• Does not apply lender affordability rules, which use stressed rates well above the product rate
• Not financial advice — a broker or lender illustration is the binding figure

Questions people ask about this in United Kingdom