Mortgage Calculator
Calculate a mortgage payment from the loan, rate and term, with the formula, a worked example and what the payment includes.
What your monthly payment will be
A mortgage payment is set by three things — the amount borrowed, the interest rate, and the term — combined into a fixed monthly figure that pays off the loan over its life. This calculates that payment and the total interest, so you can see the true cost of a mortgage before committing to one of the biggest financial decisions most people make.
The payment formula
The monthly payment on a repayment mortgage is:
M = P [ r (1+r)^n ] / [ (1+r)^n - 1 ]M = monthly payment P = amount borrowedr = monthly interest rate (annual / 12)n = number of payments (years x 12)The rate is monthly, and the term is in months, which is where hand calculations usually go wrong. Small changes in the rate move the payment and the total interest surprisingly far over a long term.
Worked example
A typical repayment mortgage:
What the payment really includes
The formula gives the principal and interest, but a real housing payment is usually more. The common shorthand is that it can include four things — principal, interest, taxes and insurance — so property tax and home insurance are frequently bundled in, and where the deposit is small, mortgage insurance too. That is why the amount leaving your account can exceed the loan payment this calculates. A crucial feature of the schedule is that early payments are mostly interest and later ones mostly principal, so in the first years you build equity slowly — which is why overpaying early, where allowed, saves disproportionate interest. These figures illustrate the maths; they are not financial advice, and rates, taxes and terms vary, so a lender or adviser is the right source for your own numbers.
Common questions
What determines my mortgage payment?
The amount borrowed, the interest rate and the term. A longer term lowers the monthly payment but raises the total interest substantially.
What does the payment include besides principal and interest?
Often property taxes and home insurance, and mortgage insurance if the deposit is small — so the total can exceed the loan payment alone.
Why is so much of an early payment interest?
Interest is charged on the outstanding balance, which is highest at the start, so early payments are mostly interest and equity builds slowly at first.
Does overpaying early help?
Where allowed, yes — extra payments early reduce the balance that all future interest is charged on, saving disproportionately over the term.
Are these numbers financial advice?
No — they illustrate the calculation. Rates, taxes and terms vary, so a lender or qualified adviser is the right source for your own figures.