Free tool for any UK mortgage
Know the loan, the rate and the product fee? See the monthly payment on capital repayment and on interest only side by side, with any product fee added to the loan. Works for residential, buy to let and commercial mortgages.
Enter the loan amount and interest rate to see the monthly payment on repayment and on interest only.
Important, not financial advice: This calculator gives estimates only. It does not check whether a lender would offer the loan, and rates change when a fixed or tracker period ends. Always confirm figures with the lender and speak to a qualified mortgage adviser.
Each monthly payment covers that month's interest plus a slice of the loan, set so the balance reaches zero at the end of the term. The standard formula is:
Payment = L × r × (1 + r)n ÷ ((1 + r)n − 1)
L is the loan, r is the annual rate divided by 12, and n is the term in months. Early payments are mostly interest; the capital share grows as the balance falls.
It is the loan multiplied by the annual rate, divided by 12. On £200,000 at 5.5% that is £916.67 a month. The payment only covers interest, so the full £200,000 is still owed at the end of the term and has to be repaid from a sale, savings or a refinance. The term does not change the monthly figure.
Repayment costs more each month but clears the loan by the end of the term. Interest only costs less each month but leaves the whole loan to repay. Most buy to let mortgages are taken on interest only to keep payments low against the rent. Residential lenders usually want repayment, or a credible plan to repay the capital.
Adding the fee increases the loan, so you pay interest on the fee for the whole term. On £200,000 at 5.5% over 25 years, a 2% fee of £4,000 added to the loan raises the payment by £18.33 a month on interest only and £24.57 a month on repayment. Adding the fee also raises the loan to value, which can matter if you are close to a lender's limit.