Enter the amount you're borrowing, the term and the interest rate to see the true monthly cost — repayment or interest-only — plus the total interest over the life of the loan and an amortisation chart showing how the balance falls. Add a second rate to compare deals or stress-test a remortgage.
5 min read·Updated 17 July 2026·🇬🇧 UK
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Amortisation — balance & cumulative interest
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How it works
How mortgage repayments are calculated
A repayment (capital and interest) mortgage uses the amortisation formula:
Monthly payment = P × r / (1 − (1 + r)⁻ⁿ)
where P is the loan, r the monthly rate (annual ÷ 12) and n the number of monthly payments. Each payment first covers the month's interest on the outstanding balance; the remainder reduces the capital. Because the balance shrinks every month, the interest portion falls and the capital portion grows — slowly at first, then accelerating. An interest-only mortgage skips the capital element entirely: cheaper monthly, but the full loan survives to the end of the term.
Worked example: £200,000 at 5% over 25 years
Monthly rate 0.4167%, 300 payments → £1,169.18 a month. Total repaid: £350,754, of which £150,754 is interest — three-quarters of the original loan again. The same borrowing interest-only costs £833.33 a month but leaves the whole £200,000 outstanding, having paid £250,000 of pure interest along the way. Put a comparison rate of 4% in and the repayment falls to £1,055.67 — £34,000 less interest over the term, which is what rate-shopping is really worth.
Affordability starts with income: check what the repayment looks like against your actual monthly pay in the take-home pay calculator, or work out the salary a target repayment needs with the required salary calculator.
Frequently Asked Questions
How is a monthly mortgage repayment calculated?
Repayment mortgages use the standard amortisation formula: monthly payment = P × r ÷ (1 − (1 + r)^−n), where P is the amount borrowed, r the monthly interest rate and n the number of months. A £200,000 loan at 5% over 25 years costs £1,169 a month. Interest-only is simply P × r — £833 a month on the same loan, but the £200,000 remains owed at the end.
How much difference does 1% on the interest rate make?
On £200,000 over 25 years, moving from 4% to 5% raises the monthly payment from £1,056 to £1,169 — £113 a month, or almost £34,000 of extra interest over the term. Use the comparison rate field to see your own remortgage scenario side by side.
Should I choose repayment or interest-only?
Repayment clears the debt by the end of the term and is what most residential lenders require. Interest-only keeps monthly costs down but the full loan remains outstanding, so you need a credible repayment vehicle — it is most common for buy-to-let. The toggle shows both costs for your figures.
Why does so little capital clear in the early years?
Interest is charged on the outstanding balance, which is largest at the start — in year one of a 5%, 25-year loan roughly 70% of each payment is interest. The amortisation chart on this page shows the balance curve bending steeper as the years pass, which is also why overpaying early saves the most.
How does the term length change the total cost?
Stretching £200,000 at 5% from 25 to 35 years cuts the monthly payment from £1,169 to £1,009, but lifts total interest from about £151,000 to £224,000. Shorter terms cost more per month and far less over a lifetime — try both in the calculator to find your balance point.
What salary do I need for a given mortgage?
Lenders typically offer 4 to 4.5 times gross annual income, so a £200,000 loan needs roughly £45,000–£50,000 of salary (or joint income). Affordability checks also stress-test the monthly payment against your outgoings — pair this page with the take-home pay calculator to see the repayment as a share of your real monthly income.
Disclaimer: Figures are estimates assuming a constant interest rate for the whole term; real mortgages combine fixed and variable periods, fees and overpayment options. Verify any deal with the lender's illustration and consider advice from a qualified mortgage adviser.