A repayment mortgage, also known as an annuity mortgage or a capital and interest mortgage, is the most common type of home loan. With this type of mortgage, each monthly payment you make consists of two parts: a portion that pays off the interest charged on the loan, and a portion that reduces the outstanding capital (the amount you originally borrowed).
How the Monthly Payment is Calculated
The calculation for a repayment mortgage ensures that by the end of the loan term, the entire loan amount (capital) is repaid, along with all the interest accrued. The formula used is derived from the standard annuity payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment.
P = The principal loan amount (the total amount borrowed).
i = Your monthly interest rate. This is calculated by dividing the annual interest rate by 12 (e.g., 3.5% annual rate becomes 0.035 / 12 = 0.00291667 monthly rate).
n = The total number of payments over the loan's lifetime. This is calculated by multiplying the loan term in years by 12 (e.g., a 25-year term becomes 25 * 12 = 300 payments).
In the early years of the mortgage, a larger proportion of your monthly payment goes towards paying the interest, with a smaller amount reducing the capital. As time progresses, this ratio shifts, and more of your payment goes towards reducing the capital.
Using This Calculator
This calculator helps you estimate your monthly repayment mortgage costs. Simply enter:
Mortgage Amount: The total sum you need to borrow for your property.
Annual Interest Rate: The percentage rate of interest charged by the lender on an annual basis.
Loan Term (Years): The total duration over which you intend to repay the mortgage.
The calculator will then provide an estimated monthly payment, the total amount you will repay over the life of the loan, and the total interest you will have paid.
Key Considerations:
Accuracy: This is an estimate. Actual payments may vary slightly due to lender-specific calculation methods, fees, and any changes in interest rates if you have a variable-rate mortgage.
Fees: Mortgage arrangements fees, valuation fees, and other charges are not included in this calculation and should be factored into your overall borrowing costs.
Affordability: Always ensure that the calculated monthly payment fits comfortably within your budget, considering other living expenses and potential changes in your financial circumstances.
Mortgage Type: This calculator is specifically for repayment mortgages. Other mortgage types, like interest-only mortgages, have different repayment structures.
function calculateRepaymentMortgage() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPayment = document.getElementById("monthlyPayment");
var totalRepaidDisplay = document.getElementById("totalRepaid");
var totalInterestDisplay = document.getElementById("totalInterest");
// Clear previous results
monthlyPayment.textContent = "£0.00";
totalRepaidDisplay.textContent = "Total Repaid: £0.00";
totalInterestDisplay.textContent = "Total Interest Paid: £0.00";
// Validate inputs
if (isNaN(loanAmount) || loanAmount <= 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
var m;
if (monthlyInterestRate === 0) {
// Handle 0% interest rate case
m = loanAmount / numberOfPayments;
} else {
// Standard mortgage formula
m = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
var totalRepaid = m * numberOfPayments;
var totalInterest = totalRepaid – loanAmount;
// Display results, formatted to 2 decimal places
monthlyPayment.textContent = "£" + m.toFixed(2);
totalRepaidDisplay.textContent = "Total Repaid: £" + totalRepaid.toFixed(2);
totalInterestDisplay.textContent = "Total Interest Paid: £" + totalInterest.toFixed(2);
}