Mortgage payments: principal, interest and the cost of time
A mortgage payment estimate is useful only when you know what it includes. This calculator models a fixed-rate loan repaid in equal monthly instalments. It returns principal and interest, total repayment and total interest; it does not calculate a property's purchase price or the full cost of homeownership. Use the amount actually borrowed, after your down payment, rather than the asking price. The arithmetic works with USD, GBP, EUR or any other single currency; keep all amounts in the same currency.
The payment formula
Monthly payment = P × r / (1 − (1 + r)^−n). P is the loan principal, r is the annual interest rate divided by 100 and then by 12, and n is the term in years multiplied by 12. At zero interest, payment is simply P / n. Total interest is monthly payment × n − P. Calculations use unrounded payments before displaying rounded results.
Early in the loan, interest is charged on a larger outstanding balance. Later payments contain more principal even though the payment stays unchanged. A shorter term usually increases the monthly payment but reduces total interest when the rate and borrowed amount stay the same.
Build a complete housing budget
Add property taxes, homeowners insurance, mortgage insurance where applicable, association or service charges, maintenance and closing costs separately. Do not enter an APR that includes fees as though it were the contract interest rate: those measures describe different costs. Compare the lender's documented interest rate, APR and charges together.
This is not an adjustable-rate forecast, a refinancing recommendation or an affordability decision. It does not model extra payments, payment holidays or a changing rate. UK deals may have a fixed introductory period followed by another rate; rerun the estimate for possible future rates rather than assuming today's rate lasts for the entire mortgage.
Worked examples
US purchase: USD 375,000 with a 20% down payment
Assume a USD 375,000 price less USD 75,000 down: enter USD 300,000 borrowed, 6% contractual annual interest and 30 years. With 360 payments and r = 0.005, principal and interest are USD 1,798.65 per month. Total interest is approximately USD 347,514.57 before fees, taxes and insurance. These are illustrative inputs, not a current mortgage offer.
The same loan over 15 years
At the same 6% rate, the monthly payment rises to USD 2,531.57 while total interest falls to approximately USD 155,682.69. This comparison keeps principal and rate constant; it does not assume shorter-term lenders quote the same rate.
UK repayment mortgage scenario
Assume a GBP 250,000 purchase, GBP 50,000 deposit and GBP 200,000 borrowed at 4.5% over 25 years. Enter 200000, 4.5 and 25: principal and interest are GBP 1,111.66 monthly. If that rate stayed constant for all 300 payments, interest would total GBP 133,499.49. A two- or five-year fixed deal does not guarantee that full-term result; later rates require another scenario. This is repayment, not interest-only financing.
Pakistan regional arithmetic, not an Islamic-finance quote
A hypothetical PKR 10,000,000 amortising loan at a constant 14% over 25 years gives PKR 120,376.10 monthly and PKR 26,112,831.30 total interest. These are assumed inputs, not current rates or a model of a bank’s Islamic home-finance contract.
Frequently asked questions
Is the loan amount the same as the home price?
No. Enter the amount financed after subtracting the down payment. Include financed fees only if the lender adds them to the loan balance.
Does the result include taxes and insurance?
No. It is principal and interest only. Add local property taxes, insurance and other ownership costs to estimate a total budget.
Can I use it for a variable-rate mortgage?
Use it to compare separate fixed-rate scenarios. It does not predict a changing payment schedule or future interest rates.
Is APR the rate I should enter?
Use the contractual annual interest rate. APR may include fees and should be compared separately when evaluating the total borrowing cost.