UK Home Mortgage Payment Calculator

Mortgage Payment Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (PMT):

Total Payment:

Total Interest:

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1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including interest. This is the standard calculation used by UK lenders for repayment mortgages.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( PMT \) — Monthly payment amount
\( P \) — Principal loan amount
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of payments (loan term in years × 12)

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that covers both principal and interest.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payments helps with budgeting and financial planning. It allows you to compare different loan options and understand the long-term cost of borrowing.

4. Using the Calculator

Tips: Enter the loan amount in pounds, the annual interest rate as a percentage (e.g., 3.5 for 3.5%), and the loan term in years. The calculator will show your monthly payment, total repayment amount, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: Does this include UK stamp duty or other fees?
A: No, this calculates only the principal and interest payments. Additional costs like stamp duty, valuation fees, or insurance are not included.

Q2: How accurate is this calculator?
A: It provides accurate estimates for standard repayment mortgages. Actual payments may vary slightly based on lender-specific calculations and payment dates.

Q3: What's the difference between interest-only and repayment mortgages?
A: This calculator is for repayment mortgages where you pay both principal and interest. Interest-only mortgages have lower monthly payments but require a separate plan to repay the principal.

Q4: How does changing the term affect my mortgage?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest paid.

Q5: Can I calculate overpayments with this?
A: This shows standard payments only. For overpayment calculations, you would need a more advanced mortgage calculator.