Mortgage repayment calculator
See your monthly payment and the total cost over the term — and compare repayment against interest-only, with the effect of linked offset savings.
Repayment vs interest-only
On a repayment mortgage each monthly payment chips away at the capital as well as the interest, so the debt is cleared by the end of the term. On interest-only you pay only the interest, keeping monthly costs low, but the full capital is still owed at the end and must be repaid another way.
Most residential buyers choose repayment for the certainty of owning the home outright. Interest-only is more common in buy-to-let, where investors maximise monthly rental cash flow and repay the capital from the eventual sale or other assets.
Where offset helps contractors
Contractors often hold cash in the business or personally for tax. An offset mortgage links those savings to the loan so you’re charged interest only on the difference — cutting your bill without locking the money away. See offset mortgages for how this works in practice.
What the monthly figure does not include
The payment shown here covers capital and interest on the mortgage itself. It does not include the costs that arrive alongside it — buildings insurance, any service charge or ground rent on a leasehold property, or the protection cover that keeps the payment going if you cannot work.
Budgeting from the mortgage payment alone is one of the more common ways a purchase becomes uncomfortable a few months in. Add the running costs before deciding what you can afford, particularly on a flat, where the service charge can be a significant monthly figure in its own right.
Why the rate matters more than the term
Lengthening the term lowers the monthly payment, which is why it is such a tempting lever. But it does so by keeping the balance outstanding for longer, so the total interest rises substantially — the amortisation calculator shows how much.
A better rate reduces the monthly payment and the total cost at the same time. For most people the productive question is therefore not "how long can I stretch this" but "which lenders will give me their best pricing" — which, for a contractor, comes back to whether your income is read from the contract or from the tax return. Check the difference on the contractor mortgage calculator.
Stress-test the payment before you commit
Lenders test your affordability at a rate higher than the one you are being offered, precisely because deals end and rates move. It is worth doing the same for yourself rather than relying on their threshold.
Run the payment at a rate a point or two above today's on the rate change calculator. If the higher figure would be uncomfortable, that is useful information now rather than in two years when the fix expires. For income that varies between contracts, that margin of comfort matters more than it does on a salary.
Repayments, answered
How is my monthly mortgage payment calculated?+
On a repayment mortgage, the payment is the amount that clears the loan over the term at the given rate, blending interest and capital. On interest-only, you pay just the interest each month and repay the capital separately at the end.
What does the offset option do?+
Linking savings to your mortgage means interest is charged only on the balance after your savings are deducted. The calculator models this by reducing the interest-bearing balance, which lowers the interest you pay while your savings stay accessible.
Why does the real payment change later?+
This calculator assumes one rate for the whole term. In practice your introductory fixed or tracker rate ends and you move to a new rate — which is why remortgaging before you hit the standard variable rate matters.
Does this calculator include fees?+
No — it shows capital and interest on the loan amount you enter. Arrangement fees, valuation and legal costs sit outside it. If you plan to add the arrangement fee to the loan, include it in the loan amount, since you will be paying interest on it for the rest of the deal.
Why is my lender's figure different?+
Lenders calculate interest in slightly different ways, apply their own rounding, and may include fees or insurance in the figure they quote. Small differences are normal. Treat this as an indicative planning figure rather than a quotation, and take the lender's illustration as definitive.