Mortgage Payment Calculator (UK)

How it is calculated

Capital Repayment: M = P[r(1+r)^n] ÷ [(1+r)^n − 1]; Interest Only: M = (P × r) ÷ 12

Worked example: UK First-Time Buyer Mortgage on a £250,000 Property

£250,000 purchase price, £25,000 deposit (10%), 25-year repayment term at 4.9% fixed.

1. Calculate loan amount: £250,000 − £25,000 = £225,000 borrowed (90% LTV).
2. Determine monthly rate: 4.9% ÷ 12 = 0.0040833.
3. Apply amortization over 300 months: £225,000 × (0.0040833 ÷ (1 - (1.0040833)^-300)) = £1,301.65.
4. Multiply across 25 years: £1,301.65 × 300 = £390,495 total repaid.
5. Calculate total interest: £390,495 − £225,000 = £165,495 in interest charges.

Monthly repayment of £1,301.65 with £165,495 total interest paid over 25 years.

How to Use This Calculator (Step-by-Step)

1. Enter the agreed property purchase price in pounds (£).
2. Input the cash deposit you have saved from savings, Lifetime ISA, or equity.
3. Check the resulting Loan-to-Value (LTV); lower LTV bands (60%, 75%, 80%) unlock lower lender interest tiers.
4. Enter the annual mortgage interest rate provided on your Mortgage in Principle (AIP).
5. Select your repayment type: Capital & Interest pays off the loan balance; Interest-Only leaves the capital to be repaid separately.

Frequently asked questions

What is Loan-to-Value (LTV) and why does it matter in the UK?

LTV is the percentage of the property value you borrow. A £90,000 loan on a £100,000 flat is 90% LTV. Lower LTVs represent less risk to UK lenders, qualifying you for significantly cheaper interest rates.

What happens at the end of a UK fixed-rate deal?

When a 2-year or 5-year fixed rate expires, your mortgage automatically reverts to the lender’s Standard Variable Rate (SVR), which is typically much higher. Most borrowers remortgage onto a new fixed deal.

Can I overpay my UK mortgage?

Most UK fixed-rate mortgages permit penalty-free annual overpayments of up to 10% of the outstanding balance, which reduces your principal and shortens the loan term.

What is the difference between repayment and interest-only?

On a capital and interest repayment mortgage, each monthly payment reduces the loan balance. On an interest-only mortgage, the monthly payment is simply the loan amount multiplied by the rate and divided by 12, so the capital remains to be repaid separately at the end of the term.

Why do lower LTV bands get cheaper rates?

A lower loan-to-value means you borrow a smaller percentage of the property value, which represents less risk to the lender. The how-to steps note that lower LTV bands of 60%, 75%, and 80% unlock lower lender interest tiers.

What can I use as my deposit?

The how-to steps list cash saved from savings, a Lifetime ISA, or equity as deposit sources. Enter the total cash deposit you have available, and the calculator subtracts it from the purchase price to give the loan amount.