Loan & Mortgage Calculator

How loan repayments are actually calculated.

Most loans and mortgages are repaid through amortisation: a fixed monthly payment that stays the same for the whole term. Although the payment never changes, what it covers does. Each instalment is split between interest (the cost of borrowing, charged on the outstanding balance) and principal (the original sum you borrowed). Because interest is charged on whatever you still owe, early payments are mostly interest, while later payments chip away far more principal. This calculator uses the standard amortisation formula to work out that fixed payment from three inputs.

The principal is the amount you borrow. The annual interest rate is the yearly cost of the loan, which the tool divides by twelve to find the monthly rate. The term is how long you take to repay it, in years. Extending the term lowers the monthly payment but raises the total interest paid, because you owe money for longer — the visual bar above shows exactly how much of your total goes to interest versus principal.

Use it to compare offers side by side or to see the true lifetime cost of borrowing before you commit. One caution: lenders may quote a flat rate, charged on the original balance, which looks cheaper than the equivalent APR (annual percentage rate). APR reflects the real cost on the reducing balance and includes most fees, so it is the figure to compare between loans.

Everything is computed instantly in your browser. No figures are sent to a server, so you can model salaries, debts and property prices privately.