Mortgage calculator: monthly payment and interest
Work out the monthly payment of a fixed-rate mortgage, the total interest and what you will end up paying, from the loan amount, rate and term.
- Monthly payment
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- Total interest
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- Total you will pay (loan plus interest)
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An estimate at a fixed rate with the interest shown, in whatever currency you type the amount. It does not include fees, insurance or the costs of buying, and it is not an offer or financial advice.
A two-pan balance on a column. The left pan holds a weight marked with a percent sign, the interest; the right one, a weight marked with the euro sign, the principal. In front, a 30-year ruler with a cursor. Enter, Space or the arrow keys move from one step to the next.
How to use it
- Type the amount you are borrowing, not counting your own deposit or down payment.
- Enter the annual interest rate and the term in years.
- Check the monthly payment, the total interest and what you will have paid by the end.
Frequently asked questions
How is a mortgage payment calculated?
With the standard amortisation formula for a repayment mortgage: the payment is the same every month. At first almost all of it is interest and, as the debt goes down, each payment repays more of the loan.
Does it work for a variable or adjustable-rate mortgage?
Only as a guide: enter the rate you pay today and you will see the payment until the next review. When the rate changes, the payment changes with it.
What is the difference between the interest rate and the APR?
The interest rate is what the lender charges on the loan, and the payment is calculated with it. The APR adds fees and compulsory costs, and is the figure to use when comparing offers.
Does it include the costs of buying?
No. On top of the payment you will have taxes, legal and valuation fees, and any insurance you take out, which vary a lot from country to country. The calculator works with any currency: it only does the arithmetic.
How the payment is calculated
A standard repayment mortgage uses constant payments: the amount is the same every month as long as the rate does not change. The formula is payment = P × r ÷ (1 − (1 + r)^−n), where P is the amount borrowed, r the monthly interest rate (the annual rate divided by 12) and n the number of payments.
Each payment has two parts: the month’s interest, calculated on what is still owed, and the capital being repaid. At the start the debt is high and almost all of the payment is interest; as the years go by the proportion reverses. That is why paying off part of the loan early saves more the sooner you do it.
How much the rate and the term matter
One percentage point looks small, but applied over decades it changes the cost a great deal. The table shows the same loan at different rates.
The term works against intuition: lengthening it lowers the monthly payment but raises the total interest, because you owe more money for longer. Try the same amount over 20, 25 and 30 years and compare the interest before deciding.
| Interest rate | Monthly payment | Total interest | Total paid |
|---|---|---|---|
| 3% | 948.42 | 84,526.00 | 284,526.00 |
| 4% | 1,055.67 | 116,701.00 | 316,701.00 |
| 5% | 1,169.18 | 150,754.00 | 350,754.00 |
| 6% | 1,288.60 | 186,580.00 | 386,580.00 |
| 7% | 1,413.56 | 224,068.00 | 424,068.00 |
How much mortgage you can afford
Lenders rarely finance the whole price of a home: the rest, plus the taxes and fees of the purchase, comes out of your savings. How much they lend and what the costs are depends on the country and on the lender, so check the rules where you are buying.
A common rule of thumb is that the payment, added to the rest of your debts, should stay within roughly a third of your household’s take-home income. If the rate is variable, also work out the payment with a couple of points more interest to check that you could keep paying it if rates rise.
