Mortgage Calculator
Updated: April 2025 for 2025/26 tax year | Data sources: HMRC, ONS, Bank of England
Calculate your monthly mortgage repayments, total interest, and loan-to-value (LTV) instantly.
How the Mortgage Calculator Works
Our mortgage calculator uses the standard amortisation formula to calculate your monthly payment based on the loan amount, interest rate, and term length. Here's the mathematical formula used:
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)
Understanding Key Terms
Loan-to-Value (LTV): This is the ratio of your mortgage to the property value. A 25% deposit = 75% LTV. Higher LTV (e.g., 90-95%) typically means higher interest rates and the requirement for mortgage protection insurance.
Repayment vs Interest-Only: With repayment mortgages, your monthly payment covers both principal and interest, gradually reducing your debt. With interest-only mortgages, you only pay the interest each month, and the principal stays the same—you'll need a separate plan to repay the capital.
Amortisation Schedule: This shows how your payment is split between principal and interest each month. Early payments are mostly interest; later payments are mostly principal. Our calculator generates a detailed year-by-year amortisation table.
What Affects Your Monthly Payment?
- Loan Amount: Higher loan = higher payment. A larger deposit reduces your loan and monthly payment.
- Interest Rate: Even a 0.5% increase significantly raises your monthly payment over 25 years. Shop around for the best rates.
- Loan Term: A longer term (30 years vs 25) spreads payments over more months, lowering the monthly amount but increasing total interest.
- LTV: Most lenders offer better rates to borrowers with lower LTV (more deposit). At 75% LTV, you'll typically get better rates than at 90% LTV.
- Credit Score: Excellent credit scores get the best mortgage rates. Poor credit may result in higher rates or loan rejection.
- Mortgage Type: Fixed-rate mortgages lock in a rate for 2-5 years. Variable rates fluctuate with the Bank of England base rate.
Understanding Mortgage Rates
Fixed-Rate Mortgages: Your interest rate is fixed for a set period (typically 2, 3, or 5 years). Your monthly payment stays the same, making budgeting easier. When the fixed period ends, you'll need to remortgage at the current market rate.
Variable-Rate Mortgages: Your rate fluctuates based on the lender's Standard Variable Rate (SVR) or moves with the Bank of England base rate. Tracker mortgages follow the base rate closely—if the Bank of England cuts rates, your mortgage payment drops. Conversely, if rates rise, your payment increases.
Bank of England Base Rate Impact: The current base rate (as of 2026) influences all mortgage rates. Each 0.25% change in base rate affects your payment by roughly £30/month on a £250,000 mortgage.
Tips to Reduce Your Mortgage Payment
- Increase Your Deposit: A 30% deposit (70% LTV) gets better rates than 20%. Aim for at least 20% to avoid mortgage insurance.
- Extend the Term: Moving from 25 years to 30 years lowers monthly payments, but you pay more total interest. Use with caution.
- Improve Your Credit Score: Pay bills on time, reduce credit card debt, and fix errors on your credit file to access lower rates.
- Make Overpayments: Pay extra when possible. Many mortgages allow up to 10% annual overpayments without penalty. This saves significant interest over the loan term.
- Shop Around: Don't accept the first rate. Compare fixed rates from multiple lenders—a 0.5% difference costs thousands over 25 years.
- Use Our Mortgage Overpayment Calculator: See how much interest you save by making extra payments.
How to Use This Calculator
- Enter Property Value: The full purchase price of the property.
- Enter Your Deposit: How much you're putting down. The loan amount auto-calculates.
- Enter Interest Rate: Check current mortgage rates from major lenders. Enter the 5-year fixed rate you're quoted.
- Select Loan Term: Most people choose 25 years. Longer terms lower monthly payments but increase total interest.
- Choose Repayment Type: Select "Repayment" for a standard mortgage or "Interest-Only" if that's your product.
- Review Results: See your monthly payment, total interest over the life of the loan, and the year-by-year amortisation schedule.
Financial Disclaimer: This calculator provides estimates only and does not constitute financial advice. Actual mortgage payments may vary based on fees, insurance, and individual lender terms. Always seek independent financial advice before making financial decisions.
Mortgage Calculator FAQ
What deposit do I need to get a mortgage?
Most lenders require a minimum 5-20% deposit. With 5-10% down, you'll pay Mortgage Protection Insurance (MPI). At 20% or more, you typically avoid insurance. The deposit affects your LTV—lower LTV means better interest rates. For a first-time buyer, aim for at least 10-15% if possible.
How much mortgage can I afford?
Most lenders offer 4.5x annual income, some up to 5x. Use our Mortgage Affordability Calculator to check. A general rule: your mortgage payment should be no more than 30% of gross income. Use your actual salary and any existing debts to calculate affordability.
What's the difference between repayment and interest-only?
With repayment mortgages, your monthly payment covers principal and interest, gradually reducing your debt to zero. With interest-only, you pay only interest each month; the principal remains unchanged. Interest-only mortgages are now less common and riskier—you must have a plan to repay the capital (e.g., investments or savings).
Should I choose a 25-year or 30-year mortgage?
A 25-year term is standard in the UK. A 30-year term lowers monthly payments but increases total interest by roughly 40%. Consider your retirement age—you'll want the mortgage paid off by retirement. A 25-year term ending at age 65 means starting at 40. The longer the term, the more total interest you pay.
How do I compare mortgage offers from different lenders?
Get a Decision in Principle (DIP) from multiple lenders. This shows you the exact rate you qualify for without a hard credit check. Compare the headline rate, but also consider fees (arrangement, valuation, legal). Use our calculator to see the total monthly payment and interest. A lower rate saves more than a lower fee.
What if interest rates rise after I fix my mortgage?
A fixed-rate mortgage locks your rate for 2-5 years, so rising rates don't affect you until the fixed period ends. If rates rise, your payment will increase when you remortgage. Variable-rate mortgages track the base rate immediately, so rising rates increase your payment right away. Fixed rates provide certainty and protection against rate rises.
Can I make overpayments on my mortgage?
Most mortgages allow you to overpay up to 10% of the balance per year without penalty. Overpayments go directly toward principal, saving significant interest and shortening your loan term. A £200/month overpayment on a 25-year mortgage can save £50,000+ in interest. Use our Mortgage Overpayment Calculator to see the savings.
What's included in my mortgage payment?
This calculator shows principal and interest only. Your actual payment may also include: Buildings Insurance, Contents Insurance, Mortgage Protection Insurance (if LTV > 80%), and sometimes ground rent or service charges on flats. Ask your lender for a full payment breakdown.