How it works
Monthly payment = P × r ÷ (1 − (1 + r)⁻ⁿ), where r is the monthly rate and n is the number of payments.
A worked example
Borrowing 240,000 over 25 years at 4.5% gives a monthly repayment of about 1,334.00.
What to keep in mind
Fixed nominal annual interest divided by 12, monthly repayments in arrears. Excludes fees, taxes, insurance and rate changes. Not a lender quote.
How mortgage repayments are calculated
On a repayment mortgage, each monthly payment covers that month’s interest and pays off part of the loan. The payment stays the same while the rate is fixed, but early payments are mostly interest and later payments are mostly capital. The calculator uses the standard amortisation formula with the annual rate divided by 12.
Worked example
A £300,000 home with a £60,000 deposit means borrowing £240,000. At 4.5% over 25 years, the monthly repayment is about £1,334 and the total interest is about £160,200.
How the term changes your payments
A longer term lowers the monthly payment but increases the total interest. Borrowing £200,000 at 4.5% costs about £1,112 a month over 25 years, with about £133,500 of interest. Over 30 years it is about £1,013 a month, but the interest rises to about £164,800.
How the interest rate changes your payments
Small rate changes make a big difference. £200,000 over 25 years costs about £1,112 a month at 4.5% and about £1,228 a month at 5.5%, an extra £116 a month. Try a higher rate to see what happens when a fixed deal ends.
Frequently asked questions
How much is a £200,000 mortgage per month?
At 4.5% over 25 years, about £1,112 a month. At 5.5%, about £1,228 a month.
Does this include fees, insurance or stamp duty?
No. It covers capital and interest only. Add arrangement fees, insurance and Stamp Duty separately when budgeting.
Is this a repayment or interest-only mortgage?
Repayment. An interest-only mortgage has lower monthly payments, but the full loan is still owed at the end of the term.
What happens at a 0% rate?
The loan is divided equally across all monthly payments. No interest is added.
How much can I borrow?
Lenders usually look at income, outgoings and credit history, often lending around 4 to 4.5 times income. Use the mortgage affordability calculator for a rough guide.
For general information and planning, not personalised financial or tax advice. Verify important decisions with a qualified adviser.