Mortgage Calculator – Monthly Payment & Interest
UK Mortgage Calculator
Compare repayment and interest-only mortgages, deposits, monthly costs and optional overpayments.
Monthly payment and overpayment comparison
Additional monthly overpayment—
Estimated interest saved—
Expected mortgage term with overpayments—
Loan-to-value at outset—
Where the total payments go
Principal and interest proportions.
Figures are illustrations. Actual mortgage offers, rates, fees and repayment calculations may differ.
Repayment breakdown
| Year | Paid during period | Interest | Principal repaid | Balance |
|---|
Mortgage payments explained: what does your home really cost?
When you’re looking at properties, the asking price is only one part of the decision. A £300,000 home does not necessarily mean borrowing £300,000: your deposit reduces the amount you need from a lender. But the mortgage type, interest rate and repayment term can significantly change how much you pay each month.
This calculator is designed to let you experiment with those choices. Enter a property price, choose a deposit, select a repayment or interest-only mortgage, and see how the numbers change. You can also explore what an extra monthly payment might do to your balance and interest costs.
How to use the FreeToolsPad Mortgage Calculator
- Property price: Enter the price of the home you are considering.
- Deposit: Choose an amount in pounds or a percentage of the price. The calculator subtracts this from the purchase price to find the loan amount.
- Mortgage type: Choose a repayment mortgage or an interest-only mortgage.
- Interest rate: Enter an annual percentage rate for the illustration. It is not a live lender quote.
- Term: Choose a period between one and 40 years.
- Overpayment: If you want, enter an extra amount you could pay towards capital each month.
- Breakdown: Switch between yearly and monthly entries to see how interest and the balance develop.
Repayment versus interest-only mortgages
Capital repayment mortgage
Each standard monthly payment covers interest and repays some of the borrowed capital. As the balance falls, less interest is charged on the outstanding loan. With the assumed constant interest rate and regular payments, the mortgage is scheduled to be cleared by the end of the selected term.
Interest-only mortgage
Here, standard monthly payments cover the interest but do not pay down the original loan. For example, on a £200,000 loan with a constant 5% annual rate, the basic interest-only payment is approximately £833.33 a month. Without capital overpayments, the £200,000 still needs to be repaid when the mortgage ends.
That remaining balance isn’t a small detail. An interest-only borrower normally needs a credible separate plan for repaying the capital, such as suitable savings or other accepted assets. Interest-only mortgage availability and eligibility also vary by lender. A smaller monthly mortgage payment should not be mistaken for an affordable home overall.
Worked example: the same home, two mortgage types
Imagine a property priced at £300,000 with a 10% deposit. Your deposit would be £30,000, leaving a £270,000 mortgage. At an illustrative 5% annual interest rate over 25 years:
| Feature | Repayment | Interest-only |
|---|---|---|
| Borrowed amount | £270,000 | £270,000 |
| Approx. monthly payment | £1,578 | £1,125 |
| Capital left at end without overpayments | £0 | £270,000 |
The interest-only payment looks easier on the monthly budget, but it does not include a separate contribution to a plan for clearing the remaining £270,000. Both results assume the rate stays at 5% for all 25 years, which may not happen in practice.
How much difference does a larger deposit make?
A deposit reduces how much you need to borrow. On a £300,000 purchase, a 10% deposit is £30,000, while a 20% deposit is £60,000. The second buyer borrows £30,000 less. At the same rate and term, this normally lowers the monthly payment and total interest. A larger deposit can also change which mortgage products lenders offer, although the calculator does not predict lender eligibility or available rates.
The loan-to-value ratio (LTV) compares your mortgage amount with the property’s value. Borrowing £270,000 against a £300,000 property is 90% LTV. Borrowing £240,000 against the same property is 80% LTV.
What happens when you extend the mortgage term?
Spreading a repayment mortgage over more years generally reduces the standard monthly payment, assuming the rate stays the same. But interest has longer to accumulate, so the total cost can increase. A shorter term usually means higher monthly commitments and less lifetime interest under the same assumptions.
Try switching between 20, 25, 30 and 35 years without changing the loan or interest rate. This is often a clearer way to understand the trade-off than looking at a single payment figure.
Can monthly overpayments reduce mortgage costs?
On a repayment mortgage, paying extra towards principal can reduce future interest and may clear the mortgage earlier. This calculator assumes you maintain the original standard repayment amount and add the overpayment each month, rather than asking the lender to recalculate a smaller standard payment.
For an interest-only mortgage, an overpayment towards principal gradually reduces the outstanding capital and therefore the future monthly interest charge. The calculator displays the balance remaining at the end of the selected term. The standard interest-only payment changes as that balance decreases.
Overpayment rules vary. Some mortgage deals limit overpayments or charge an early repayment fee. Always review the specific mortgage agreement before making a financial decision.
What this mortgage calculator does not include
Real mortgage costs can involve far more than principal and interest. Our estimates do not include arrangement fees, valuation fees, legal fees, insurance, Stamp Duty Land Tax or equivalent property transaction taxes, or the cost of maintaining a home. They also assume a fixed annual interest rate throughout the term and do not model changes when a fixed-rate deal ends.
The results are not mortgage offers, affordability decisions, or guarantees that a lender will approve an application. Actual lender calculations may use different compounding conventions, payment dates and rounding.
Frequently asked questions
Does an interest-only mortgage mean I never repay the loan?
No. Standard payments cover interest, but the original loan must still be repaid, usually when the mortgage term ends. You need a suitable capital repayment plan.
Is a repayment mortgage always better?
They serve different needs. Repayment mortgages steadily reduce the debt, while interest-only mortgages have lower standard monthly payments but require a separate approach to repaying capital. Personal suitability and lender requirements differ.
Does the calculator use today’s mortgage interest rate?
No. You enter your own example rate. The calculator does not automatically retrieve lender offers or live market rates.
Can I enter a deposit in pounds rather than a percentage?
Yes. Use the deposit selector to switch between an amount in pounds and a percentage of the property price.
Will an overpayment always save me money?
It may reduce the interest charged, but mortgage fees, early repayment charges and alternative uses for your savings can change the overall financial outcome.
Can this calculator work for UK properties?
Yes, the arithmetic works with prices entered in pounds across the UK, but it does not calculate jurisdiction-specific purchase taxes, lender rules or other location-specific charges.
Related FreeToolsPad tools
Further reading and sources
- MoneyHelper: repayment and interest-only mortgage options
- MoneyHelper: paying off an interest-only mortgage
- MoneyHelper: mortgage overpayments
Information note: This guide provides general educational information only, not personalised mortgage or financial advice. Compare the results with an actual lender’s mortgage illustration before deciding on a product.
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