UK Mortgage Repayment Calculator

A capital-and-interest ("repayment") mortgage uses the standard annuity formula. Your fixed monthly payment M is set so that, at the agreed interest rate, the balance reaches exactly zero on the final month of the term:

Each month the lender charges interest on the outstanding balance only. Because that balance is highest at the start, early payments are mostly interest and barely dent the capital. As the balance falls, the interest slice shrinks and the capital slice grows — an accelerating curve sometimes called the "amortisation S-curve".

Take a £350,000 home with a £52,500 deposit (15%), leaving a £297,500 loan at 4.7% over 25 years (300 payments). The monthly payment works out at about £1,686. Over the full term you repay roughly £505,800 — meaning around £208,300 of intereston top of the capital. In year one, roughly £13,800 of your £20,200 in payments is interest; only about £6,400 reduces the balance.

Now add a £150/month overpayment from day one. You'd clear the mortgage around 3 years early and save roughly £30,000 in interest — a guaranteed, tax-free return equal to your mortgage rate. Use the calculator above in Advanced mode to model your own numbers.

With a repayment mortgage each payment clears interest and a slice of capital, so you own the home outright at the end of the term. With an interest-only mortgage you pay just the interest; the full capital is still owed on the final day and must be repaid from a separate plan (sale, investments, or a pension lump sum). Interest-only is now mostly limited to buy-to-let and high-equity borrowers, because residential lenders must see a credible repayment vehicle. The monthly saving is real but the long-term cost is far higher.

A fixed rate locks your rate for a set period (commonly 2 or 5 years). A tracker follows the Bank of England base rate plus a margin, so payments move with policy decisions. The standard variable rate (SVR) is the lender's default rate you roll onto when a deal ends — almost always the most expensive option, so remortgaging before then usually pays.

Crucially, fixed rates are not priced off the base rate. They're priced off swap rates — the wholesale cost banks pay to swap floating interest for fixed over a given term. Swaps reflect the market's expectations of future inflation and rates, which is why fixed mortgage deals can get cheaper or dearer even when the base rate hasn't moved.

Loan-to-value (LTV) is your loan as a percentage of the property value. Lenders price risk in discrete bands — typically 95%, 90%, 85%, 80%, 75% and 60%. These are cliff-edges, not smooth gradients: dropping from 80.1% to 79.9% can unlock a materially cheaper rate on the entireloan. A modest overpayment or a higher valuation that tips you into the next band down can produce an effective first-year return well into double digits. Below ~60% LTV the rate benefit largely flattens, so further overpayments are better weighed against pensions and ISAs.

Overpaying is mathematically equivalent to earning a guaranteed, tax-free return equal to your mortgage rate. At 4.7%, a higher-rate taxpayer would need to earn about 7.8% gross in a taxable account to match it. The trade-offs are liquidity (equity is hard to access) and early repayment charges — most fixed deals allow penalty-free overpayments of up to 10% of the balance per year, and exceeding that triggers an ERC (often 1–5% of the amount). Where expected after-tax investment returns beat the mortgage rate, tax-advantaged wrappers such as ISAs and pensions can win instead.

The headline rate isn't the full picture. Product/arrangement fees (often £999–£1,499), valuation and booking fees all add up — and if you add the fee to the loan rather than paying it upfront, you pay interest on it for the whole term. A lower rate with a big fee can be worse than a slightly higher rate with no fee on a smaller loan. Beyond the mortgage itself, budget for stamp duty, conveyancing, surveys and removals. Use the related tools below to total the real cost of buying.

Most UK lenders cap borrowing at around 4.5 times income (sometimes 5–5.5× for higher earners or specific schemes), then stress-test the payment at a notably higher rate to check you could still cope if rates rose. They also assess committed outgoings — childcare, loans, car finance and credit-card balances all reduce the maximum. That's why two people on the same salary can be offered very different amounts. To size your own ceiling, use the dedicated affordability tool.

• Drifting onto the SVR. Letting a fixed deal lapse can add hundreds a month overnight. Set a reminder 6 months before it ends and remortgage.
• Chasing the lowest rate only. A high arrangement fee can wipe out the saving. Compare the total cost over the deal period, not just the rate.
• Capitalising fees by default. Adding the fee to the loan means paying interest on it for 25 years. Pay upfront if you can.
• Over-extending the term. A longer term lowers the monthly payment but can hugely increase total interest. Use the shortest term you can afford.
• Ignoring the ERC. Overpaying above your annual allowance during a fix can incur a charge larger than the interest saved.