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Your monthly mortgage payment depends on three things: how much you borrow, the interest rate, and the length of the term. On a repayment mortgage, each monthly payment covers that month’s interest plus a slice of the original loan. Early in the term, most of your payment goes toward interest. Over time, the balance shifts and more goes toward paying down the principal.
On an interest-only mortgage, your monthly payment covers just the interest — the loan balance stays the same throughout. You need a separate plan to repay the capital at the end of the term, such as savings, investments, or selling the property.
A repayment mortgage guarantees the loan is paid off by the end of the term. Monthly payments are higher, but you build equity with every payment and owe nothing at the end. This is the most common type for residential buyers.
Interest-only mortgages have lower monthly payments but carry more risk. The full loan amount is still owed at the end of the term, and lenders will want to see a credible repayment strategy. They are more common with buy-to-let investors, where rental income covers the interest and the property is sold to clear the debt.
Most lenders require a minimum deposit of 5–10% of the property price, though a larger deposit typically gets you a better interest rate. At 10% deposit, you are borrowing at a 90% loan-to-value (LTV) ratio. At 25% deposit, you reach 75% LTV, which is where the most competitive rates tend to start.
The deposit also affects affordability. A larger deposit means a smaller loan, which means lower monthly payments and less total interest paid over the life of the mortgage. Even a small increase in deposit can make a noticeable difference to what you pay each month.
This calculator gives you the core monthly payment, but the true cost of a mortgage includes arrangement fees, valuation fees, legal costs, and potentially early repayment charges. Some lenders offer fee-free products at a slightly higher rate — whether that works out cheaper depends on how long you stay on the deal.
Most fixed-rate deals last two or five years. When the deal ends, you move to the lender’s standard variable rate (SVR), which is usually significantly higher. Most borrowers remortgage before that happens.
Monthly payments are calculated using the standard amortisation formula. For repayment mortgages, the formula assumes a fixed interest rate for the full term and equal monthly payments throughout. For interest-only mortgages, the monthly payment is the loan amount multiplied by the monthly rate. No fees, early repayment charges, rate changes, or insurance costs are included in the calculation.
For a repayment mortgage, the monthly payment is derived from the loan amount, the monthly interest rate, and the number of payments. Each payment covers that month's interest plus a portion of the principal. On an interest-only mortgage, the monthly payment is simply the loan amount multiplied by the monthly interest rate — the principal stays unchanged throughout.
With a repayment mortgage, each payment reduces the outstanding balance so the loan is fully paid off by the end of the term. With an interest-only mortgage, monthly payments cover only the interest — the full loan amount remains owing at the end and must be repaid separately, for example through savings, investments, or a property sale.
A higher interest rate increases both the monthly payment and the total interest paid over the term. Even a small change in rate — say, from 4% to 5% — can add hundreds of pounds to your monthly outgoing on a large loan. This calculator lets you adjust the rate to see the impact directly.
No — this calculator shows the core principal-and-interest payment only. The true cost of a mortgage also includes arrangement fees, valuation and legal costs, buildings insurance, and potentially service charges or ground rent. Those amounts vary by lender and property, so they are not included here.
Already have a mortgage? Use our mortgage overpayment calculator to see how extra payments could shorten your term and save on interest. Buying a property? The stamp duty calculator estimates your SDLT bill. For long-term savings, try the ISA calculator to project tax-free growth.
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