Mortgage Repayment Calculator
Estimate your monthly payments and total interest costs.
Understanding Your Mortgage Repayments
Buying a home is often the largest financial commitment you will ever make. Using a mortgage repayment calculator helps you visualize the long-term impact of interest rates and down payments on your monthly budget.
How Mortgage Payments are Calculated
Your monthly mortgage payment is primarily composed of Principal and Interest (P&I). The formula used for a fixed-rate mortgage is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
- M: Total monthly payment.
- P: Principal loan amount (Home price minus down payment).
- i: Monthly interest rate (Annual rate divided by 12).
- n: Number of months (Years multiplied by 12).
Factors That Influence Your Monthly Payment
1. Loan Term: A 15-year mortgage usually has a lower interest rate but higher monthly payments compared to a 30-year mortgage. However, you pay significantly less interest over the life of the loan.
2. Down Payment: The more you put down upfront, the less you need to borrow. If you put down less than 20%, you may also be required to pay Private Mortgage Insurance (PMI).
3. Interest Rate: Even a 0.5% difference in your interest rate can save or cost you tens of thousands of dollars over 30 years.
Example Calculation
If you purchase a home for $350,000 with a 20% down payment ($70,000), your loan amount is $280,000. At a 6% interest rate over 30 years, your monthly P&I payment would be $1,678.71. Over the life of the loan, you would pay a total of $324,336 in interest.
Why You Should Use This Calculator
Before speaking with a lender, this tool allows you to stress-test your finances. You can adjust the interest rate to see how potential market fluctuations might affect your affordability or see how increasing your down payment reduces your monthly burden.