Mortgage Payment Calculator

When you're looking at different mortgage deals, small differences can have a big effect on what you pay.

A number of factors will impact what mortgage companies are willing to lend you. Your repayments will depend on:

• How much you need to borrow

• The size of your deposit

• The interest rate your lender charges you

• How many years you’ll need to repay the mortgage

Using our mortgage payment calculator is a quick and easy way to give you an idea of your monthly repayments. Remember, these figures are a guide. Your exact repayments will depend on what mortgage you go for.

When you get a mortgage, the total loan amount your lender will offer you will be based on your affordability, the property value and the deposit you have. Mortgage companies use a formula to calculate your repayments: 

The total loan amount ÷ the length of your mortgage term + the interest the lender will charge 

For example:

The mortgage

You've borrowed £200,000

You've agreed to pay it back over 25 years

Your lender charges 3% interest in return for giving you the loan

The repayment

Over the next 25 years, you'll be charged £84,478 in interest

You'll need to pay back a total of £284,478

Your monthly repayment will be £984

Got an idea of your property price and want to know how much your monthly repayments will be? You’re in the right place. Use our handy mortgage payment calculator to see what your monthly repayments might look like.

Mortgage repayments differ depending on on how much you borrow, the size of your deposit, how much the property is worth, and the household incomings and outgoings. However, the Office of National Statistics found that the average monthly mortgage payments in the UK was £671.23 in 2018.

Like any loan, the interest rate is one of the most important factors when it comes to your mortgage repayments. Some average UK mortgage interest rates:

BSA.org.uk, (2017-2018)

Statista.com, (June 2017)

How much you pay towards your mortgage each month will depend on the length of the mortgage term. People tend to repay their mortgage over 25 years, but recently 30-35 year mortgages have become more popular.

A longer mortgage is appealing because it lowers the amount you pay each month. This makes for a more affordable mortgage and makes it easier for you to get on the property ladder. You’ll need to bear in mind that the longer you take to pay off your mortgage, the more you’ll pay in interest over the years.

According to data compiled by Statista, the average mortgage interest rate in the UK in September 2019 was 1.56% for 2-year fixed-rate mortgages. 3-year fixed-rate mortgages averaged at 1.66% and the average for 10-year fixed-rate mortgages was 2.65%. Two-year variable mortgages averaged at 1.61%.

Interest-only mortgages mean you only pay back the interest charged on the money you've borrowed (capital). When you get to the end of your mortgage term after however many years, you'll then need to pay the capital in full. With interest-only mortgages, you'll end up paying more interest than you would with a repayment mortgage because you won't be chipping away at the capital during your mortgage term.

To compare what your repayments would look like on the same property with interest-only and repayment mortgages:

Interest-only

You've borrowed £250,000

Your interest rate is 3%

You're paying it back over 25 years

Your repayments are £625 a month - a total of £187,500 over the 25-year term

You’ll still need to pay back to £250,000 at the end of the term

Repayment

Your repayments are £1,186 a month

You've paid a total of £105,800 in interest, and you've paid back everything you owe

Interest-only mortgages can be a good option if you’re looking to keep more money aside for things like home-improvements, if you’re not wanting to keep the property for a long time, or if you want to keep your initial payments lower before moving to a repayment mortgage.

When you get a mortgage, the total loan amount your lender will offer you will be based on your affordability, the property value and the deposit you have. Your monthly repayments will then be the total loan amount, divided by the length of your mortgage term, plus the interest the bank will charge. 

For example, if your lender agrees to give you £250,000 and your mortgage term lasts for 31 years, and your interest rate is 1%, your total monthly repayment will be: 

£250,000        + 1% = £275,000            ÷ 31 = £8,870.96          ÷ 12 = £739.24

Loan amount   Plus 25,000 interest          Divided by how                 Divided by 12

                                                                 many years your 

                                                                  mortgage is for 

If you can afford to overpay, you should definitely consider it. Before you do, always check if your lender will charge you an early repayment charge (ERC) first.

Interest rates on savings accounts are currently at an all-time low, so it’s often a better idea to invest your money in your property rather than have your money sitting in a savings account not earning you any interest.

Here’s two reasons why overpaying is a good idea:

• You can pay off your mortgage quicker

• There’s no interest on the amount you overpay

If you’re considering overpaying your mortgage, also consider if you have any larger debts you should probably pay off first, and also if you have enough money for emergencies – it’s always good to keep reserves separately if you need it.

Often, your mortgage repayments can work out less than what you’re currently paying if you’re renting or don’t have the best current mortgage deal. But, you should be aware of other monthly payments you might have to pay because this can significantly increase your property-related monthly outgoings. 

Monthly fees might include:

Leasehold fees

If you’re buying a flat, there could be a building maintenance, ground rent or management fees. These fees are usually monthly and go towards any maintenance to the common areas that will need doing. Common areas include the outside of the building, stairs, ceilings, shared garden. All the people in the building where your flat is will pay into this fund. 

Insurance

It’s always a good idea to insure the contents of your home, whether you’re renting or if you own your property. But it’s also a great idea to insure other more serious things after you get a mortgage. Talk to a professional insurance broker about things like life insurance, critical illness insurance and income insurance to see what you might need.

The kind of mortgage you can afford completely depends on your financial situation, including your annual salary or income and how much deposit you have. Our Mortgage Affordability calculator can help you find out how much mortgage you might be able to afford.

The amount you can borrow on a mortgage depends on your employment type, financial situation and credit score. 

When you apply for a mortgage, a mortgage lender will thoroughly look at your income, your outgoings and will also look into your credit history to work out how much they’re willing to lend to you.

If you have bad credit, our Bad Credit Mortgage Guide gives a detailed look at the different things that can affect your mortgage if you have bad credit, and explains your options. Or our Bad Credit Calculator will help you see how your credit issues can affect the amount you can borrow and the rates you might get.

If you’re self-employed, use our Self-Employed Mortgage Calculator to figure out how much you can borrow. Read our Self-Employed Mortgage Guide for an in-depth overview of your options and how being self-employed can affect your mortgage application.

For people with bad credit, there are ‘Bad credit’ mortgages available to you. Bad credit mortgages tend to have high-interest rates and there will be a lower limit on how much you can borrow. You might also have to provide a larger deposit that will be at least 20-25% of the value of the property which is a lot higher than the usual 5-10%.

Because having bad credit means you will be viewed as high risk by the lender, you will have higher interest rates and a lower borrowing limit.

Use our Bad Credit Calculator to find out how much you can borrow. Read Our Bad Credit Mortgage Guide to find out all the options open to you.

Your mortgage repayments will be the total loan amount offered by your lender divided by the length of your mortgage term plus the interest that the bank will charge.

Use our Mortgage Payments Calculator to find out how much your mortgage payments will be.

If you’re looking to find out what you can borrow, our mortgage calculators can help. Our Self-Employed Calculator can help self-employed people find out how much they can borrow. If you have bad credit, our Bad Credit Calculator will let you know how much you can borrow.

If you don’t have a deposit and need to borrow the full amount you are still able to get a loan but your options will be very limited. Borrowing with no deposit is when you get a 100% LTV (loan to value) mortgage which is a loan for the full value of the property.

A no-deposit mortgage will have higher interest rates and you’ll have to pay a lot more interest for a long time. The risk with no-deposit mortgages is that you can fall into negative equity. Negative equity is when the total amount of borrow secured against your home is more than its value. An example is if your outstanding mortgage is £200,000 and your home is worth £180,000, then you’d be in £20,000 in negative equity.

The minimum deposit mortgage lenders will usually accept is 5% of the property’s value. These are also known as 95% mortgages, if you go with this option then your options may be limited. Most lenders prefer to ask for a deposit that is 10% of the property’s value. 

The minimum deposit lenders will generally accept is 5% of the property value. These are known as 95% mortgages, and if you want one of these your options may be limited. This is because most lenders prefer to ask for at least 10% of the property value as a deposit. You can also put down a 15% deposit.

For example, if the property is £300,000, this is how much deposit you would need:

• 5% deposit: 15,000

• 10% deposit: 30,000

• 15% deposit: 45,000

You can get a loan to pay for a mortgage deposit, but many lenders don’t accept this. Most lenders will want your loan to be from a non-repayable source such as savings or a gift. However, specialist mortgage lenders will also consider your income alongside whatever you owe, and if it looks like you can afford both then there’ll be a few lenders who might consider your application.

Lenders will calculate how much you can afford on a mortgage by basing their calculations on your income and your outgoings. The more you spend each month, the less you will be able to borrow from lenders.

Lenders will do an affordability assessment which consists of two parts.

Firstly, the lender will find out how much money you make each year. They will look at your main source of income whether that’s through self-employment, or your full-time job. The lender will need to see payslips or your self-employed accounts. Other additional income like bonuses, income from a part-time job and benefits can count as long as you can provide evidence.

Your lender will also want to know what your expenses are and will deduct this from your income to work out what’s left. They do this to find out if adding your mortgage repayments to your outgoings will be difficult for you to pay. Lenders want to find out you can still afford your mortgage repayments if your financial circumstances change.

These are some examples of things they’ll want to know about: 

• Bills including; council tax, mobile phone contracts, insurance and utilities

• Any outstanding loans you have

• Credit card debt

• School fees

• Travel expenses

• Child costs if you’re a parent 

For self-employed people, mortgage lenders will assess how much you can afford in a similar way. The only difference is that you will not have payslips, so proving your income will be a little different. There is a risk with self-employed mortgage applicants that your income fluctuates and if your income changes for the worst, you won’t be able to keep up with the mortgage payments.

Affordability assessments are the same whether you’re employed or self-employed. However, if you’re self-employed proving your income is a slightly different process. There will be thorough checks when it comes to your proof of income. Most lenders will want to see three years’ worth of tax returns and a copy of your accounts verified by a chartered accountant. Lenders want to see that you have a consistent income and can meet your monthly repayments.

When choosing the best mortgage lender for you, you should take your financial situation into account. If you have bad credit or are self-employed (even both) it can be harder for you to get a mortgage without some help. That’s why if you have a complex situation or complex credit issues you should work with a specialist mortgage advisor who can find you a specialist lender. 

Specialist lenders offer you specialist mortgages tailored to your needs and have expertise in dealing with people in your situation. Specialist lenders are often only available through intermediaries because their businesses aren’t set up how the big banks are and can’t deal with that many customers in the same way. Read our Best Bad Credit Lenders List for more information on specialist lenders.

To get an Agreement in Principle, you need to give your mortgage broker or lender information about your finances. They will then give you an idea of how much you’ll be able to borrow. Read more in our Guide: What is a Mortgage Decision in Principle?

If you have any kind of credit issues, or are self-employed, or have a complicated situation, it’s best to work with a mortgage advisor who can help you. If you don’t have any credit issues and have a very standard income from a full-time, salaried job, you don’t necessarily need a mortgage broker. 

Mortgage brokers have access to a wide range of mortgages and will also have exclusive deals with lenders. Mortgage brokers will pinpoint you to lenders who are most likely to accept you. They will also do the mortgage application on your behalf, saving you time, effort and stress.

Choose a mortgage broker who is reputable, transparent and who has a proven track record of getting mortgages for people in your particular situation. 

A lot of online mortgage brokers are automated and not that helpful because they have a ‘computer says no’ approach. A mortgage broker with a human touch and who’ll look in detail at your situation on a case-by-case basis makes all the difference.

If you’re looking for a Bad Credit Mortgage, Self-Employed Mortgage, Specialist Mortgage and even trying to Remortgage, we can help.

We’re transparent about our process and about how much you will have to pay. Get in touch and make an enquiry.