Loan Payment Calculator
Work out the monthly payment on a loan or mortgage, and see how much of the total goes on interest over the life of the loan.
Your data never leaves your browser. This tool runs entirely on your device.
Monthly payment
1,228.17
- Total repaid
- 368,452.5
- Total interest
- 168,452.5
- Number of payments
- 300
- Interest as share of total
- 45.7189%
M = P · r(1+r)ⁿ / ((1+r)ⁿ − 1), r = 0.458333% monthly, n = 300
The amortisation formula
An amortising loan has a fixed monthly payment covering both interest and capital. Early on, most of each payment goes on interest; later, most goes on the balance.
The formula solves for the payment that reduces the balance to exactly zero at the end of the term.
M = P · r(1 + r)ⁿ / ((1 + r)ⁿ − 1)
- M — the monthly payment
- P — the amount borrowed
- r — the monthly interest rate (annual rate ÷ 12)
- n — the total number of monthly payments
Why the term matters more than it looks
Extending a mortgage from 25 to 35 years lowers the monthly payment noticeably, which is why it is often offered. It also increases the total interest substantially, because you are borrowing the money for ten more years.
On £200,000 at 5.5%, a 25-year term costs about £168,000 in interest and a 35-year term about £252,000 — roughly £84,000 more for a payment about £160 lower each month.
Overpaying
Because interest is charged on the outstanding balance, an overpayment reduces every future interest charge, not just the current one. Modest regular overpayments early in the term have a disproportionate effect.
Check whether your lender applies overpayments to the balance immediately, and whether early repayment charges apply.
What this calculator does not include
It calculates the capital and interest payment only. A real mortgage payment may also include buildings insurance, property tax or service charges, and arrangement fees are often added to the balance.
It also assumes a fixed rate for the whole term. If your rate is variable or fixed only for an initial period, the payment will change when the rate does.
Frequently asked questions
How is a monthly loan payment calculated?
With the amortisation formula M = P · r(1+r)ⁿ / ((1+r)ⁿ − 1), where r is the monthly rate and n the number of payments. It finds the fixed payment that clears the balance exactly at the end of the term.
Why does so much of my early payment go on interest?
Interest is charged on the outstanding balance, which is at its highest at the start. As the balance falls, the interest portion shrinks and more of each fixed payment goes to capital.
Should I choose a longer term for a lower payment?
It lowers the monthly cost but raises the total substantially. On a £200,000 loan at 5.5%, going from 25 to 35 years saves about £160 a month and costs roughly £84,000 more in interest.
How much does overpaying save?
More than the overpayment itself, because it removes future interest on that amount for the remaining term. Overpayments early in the loan save the most.
Does this include fees, insurance or tax?
No. It calculates capital and interest only. Arrangement fees, buildings insurance and property taxes are separate and can add meaningfully to the real monthly cost.
Related tools
- Compound Interest CalculatorSee how an investment grows over time with compound interest. Add a monthly contribution and choose how often interest compounds to model a real savings plan.
- Percentage CalculatorAnswer the three questions people actually ask about percentages: what is X% of Y, X is what percent of Y, and how much did a value change. Each answer shows its working.
- Salary CalculatorConvert pay between hourly, daily, weekly, monthly and yearly figures. Set your own hours per week and working weeks per year for an accurate comparison.
- VAT CalculatorAdd VAT to a net price, or work backwards from a gross price to find the tax it contains. Both directions show the net, VAT and gross amounts.