Monthly Payment
£1,315
Loan Amount: £225,000
Loan Balance Over Time
Illustrative only. Assumes a constant interest rate for the full term, which is rarely true in practice (most UK mortgages are fixed for 2–5 years then revert to a new rate). Not financial advice.
What This Calculator Does
This tool works out your monthly mortgage payment, then builds a full amortization schedule showing exactly how your loan balance declines over the term — as a chart, not just a single number.
Add a monthly overpayment to see how much faster you clear the mortgage and how much interest you save. Toggle to interest-only to see why the balance never falls without either overpaying or a separate repayment vehicle. If your deal is fixed-rate, the calculator also flags when your overpayment risks exceeding most lenders' 10%-a-year penalty-free allowance.
How the Calculation Works
The standard repayment formula spreads loan + interest evenly across the term: monthly payment = loan × monthly rate ÷ (1 − (1 + monthly rate)^−months). Each payment is split between interest (on the remaining balance) and principal — early payments are mostly interest, later payments mostly principal.
On interest-only, the monthly payment covers interest alone, so the balance stays exactly where it started unless you overpay — any overpayment goes straight to principal and is the only thing that reduces the loan.
A monthly overpayment is added to the required payment every month and applied directly to principal, which shrinks the balance faster than scheduled — every future month's interest is then calculated on a smaller balance, which is why overpaying early in the term saves disproportionately more interest than overpaying late.
Worked Example
Take a £300,000 property bought with a 75% LTV repayment mortgage at 5.00% over 25 years.
- Property value: £300,000
- LTV: 75% → loan amount: £225,000
- Monthly rate: 5.00% ÷ 12 = 0.4167%
- Term: 25 years = 300 months
- Monthly payment: £225,000 × 0.4167% ÷ (1 − (1.004167)⁻³⁰⁰) ≈ £1,315
Over 300 months that's £394,548 repaid in total — £225,000 of loan plus £169,548 in interest, roughly 75% of the original loan amount paid again just in interest.
Frequently Asked Questions
What's the difference between repayment and interest-only?
Repayment (capital + interest) mortgages pay down the loan every month, so the balance reaches zero at the end of the term. Interest-only mortgages only cover the interest — the original loan amount is still owed in full at the end of the term unless you overpay or have a separate investment vehicle (ISA, pension, etc.) to repay it.
How much does overpaying my mortgage actually save?
It depends on your rate, remaining term, and how early you start. Because interest is charged on the outstanding balance, an overpayment made early in the mortgage saves more interest than the same overpayment made near the end, since it shrinks the balance for more remaining months. Use the Monthly Overpayment slider above to see the exact interest and time saved for your own numbers.
Will I be charged for overpaying my mortgage?
Possibly. Most UK lenders allow you to overpay up to 10% of your outstanding balance per year on a fixed-rate deal without a charge; overpay beyond that and an early repayment charge (ERC) of roughly 1–5% of the balance can apply. Tracker and variable-rate mortgages typically allow unlimited overpayments with no ERC. Always check your mortgage offer document or ask your lender directly.
Why does the balance chart curve rather than decline in a straight line?
Interest is calculated on the balance still outstanding, not the original loan. Early in the term the balance is high so interest eats up most of each payment; as the balance falls, more of each fixed payment goes to principal, so the balance falls faster and faster — that acceleration is what produces the curve rather than a straight line.
Does this calculator account for my rate changing after a fixed period?
No — it assumes one interest rate for the whole term for simplicity. In reality most UK mortgages are fixed for an initial 2–5 years then revert to the lender's standard variable rate (or a new fixed deal), so re-run the calculator with your new rate once you know it to see the updated payment and balance path.