Mortgage Repayments: How Are They Calculated

Find out the factors that determine mortgage repayments, including the amount you’re actually borrowing and the interest rate you may end up with.

Home Mortgage Repayments Mortgage Repayments: How Are They Calculated

Author: Pete Mugleston

Mortgage Advisor, MD

Reviewer: Jon Nixon

Director of Distribution

Updated: March 15, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

March 15, 2024

There are a number of factors that affect what your mortgage repayments are likely to be, chief among them the amount you’re actually borrowing and the interest rate you end up with.

In this guide, you’ll find an overview of the factors that determine mortgage repayments, a handy calculator tool for working out yours and a series of repayment tables highlighting the amount you can expect to pay based on specific mortgage amounts and interest rates.

How to calculate your mortgage repayments

Use our mortgage calculator tool to get an idea of what your mortgage repayments could be based on the amount borrowed, interest rate and term length. Simply enter the amount you want to borrow along with a rate and term length to get some quick results.

Mortgage Repayment Calculator

This calculator can tell you the monthly and overall cost of your mortgage, based on the loan amount, interest rate, and term length.

Enter the amount you're borrowing
£
Enter the mortgage rate, 5.5% is a typical rate currently but this can vary
%
Enter the mortgage term, 25 years is the average but lenders can offer shorter and longer terms
years

Your Results:

The monthly repayments on a mortgage would be

The total amount paid at the end of your mortgage term would be

Get started with an expert broker to find out how much they could help you save on your mortgage repayments.

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What factors determine mortgage repayments?

First and foremost, the amount you can expect to pay back each month on your mortgage will depend on the amount of money you’ve borrowed, the term you agreed and the interest rate.

Taking out a mortgage with a longer term length means lower monthly capital repayments as the debt is spread out over a longer period, but this will mean paying more for your mortgage overall, since you’d have to make interest payments on top of that each month.

The interest rate you’ll ultimately end up with will depend on many variables, but generally speaking, the higher the level of risk, the higher the interest rate you’re likely to get. A mortgage lender might feel that the deal is risky due to factors related to your personal circumstances, because of the current market conditions, or a combination of both.

A mortgage broker can help you secure affordable mortgage repayments by making sure you end up with the most favourable rates and advising you on which product type to choose.

How interest rates are calculated

Mortgage interest rates are determined by the level of risk and the product type you choose.

You can lower the level of risk involved in the agreement by doing the following…

  • Putting down extra deposit: Most mortgages require a deposit of at least 10%, but by putting down more than the minimum, you’ll boost your chances of landing a good rate.
  • Resolve any bad credit issues: While it’s still possible to get a mortgage with certain types of bad credit, resolving any credit problems or debts you’re in a position to rectify can increase your chances of getting the best interest rate available.
  • Speaking to a mortgage broker: A mortgage broker with the right knowledge and expertise will know exactly which lender is best placed to offer the most favourable rates to you. Getting the lowest rate around will, of course, mean paying out less each month.

In addition to the factors we’ve covered above, mortgage lenders might also offer you a higher interest rate if you’re retired, self-employed with complex income or limited income proof, or buying an unusual property – all of these are considered risk factors by some lenders.

How the mortgage type affects interest rates

There are a range of mortgage product types available and the one you choose can have a major impact on the interest rate, and therefore your monthly repayments.

  • Fixed-rate: Your interest rate stays fixed for a certain period – this can be as little as one year to 10 years. Fixed-rates are often higher than variable rates because you’re paying for the security of knowing how much you’ll have to pay each month.
  • Variable rate: A variable rate mortgage is one with an interest rate that could move up or down at any point during the duration of the term.
  • Tracker rate: A tracker rate mortgage is a type of variable rate mortgage with an interest rate that’s tied to an external index, usually the Bank of England’s base rate.
  • Interest-only mortgages: These come with the lowest monthly payments, as only the interest is due each month (capital repayments are usually optional). The mortgage debt itself must be paid at the end of the term using a pre-agreed repayment vehicle.
  • Part-and-part mortgageThis is a middle ground between repayment and interest only where a portion of the mortgage is dedicated to each type. In other words, you will pay off some of the loan debt during the mortgage term, but the rest will remain at the end of the term.  Try our calculator below to find out what your repayments could look like if you choose this type of mortgage.

Part and Part Mortgage Calculator

This calculator will work out what your mortgage payments will be on an agreement that’s part interest only and part capital repayment. Simply enter the full loan amount and the portion of the debt that will be interest only, along with the interest rate and term length, and our calculator will do the rest.


Enter the amount you're borrowing
£
Enter the total amount required on interest only
£
Must be less than the loan amount
Enter the mortgage rate, 5.5% is a typical rate currently but this can vary
%
Enter the mortgage term, 25 years is the average but lenders can offer shorter and longer terms
years

Monthly Repayments:

Monthly Interest Payments:

Monthly Total Payments:

Now that you have a rough idea of what your monthly repayments could look like, speak to a mortgage broker to find out how much they could help you save each month and overall.

While mortgage calculators can be a good starting point for your mortgage plans, it’s a good idea to speak to a mortgage broker before you proceed with an application. They can provide you with more detailed calculations based on the interest rate you’ll qualify for, and help you make sure your mortgage repayments are as affordable as possible.

What to do after you have run your calculations

After you have run the calculations to get an idea of the amount you can borrow, your next step should be to speak to a mortgage broker to ensure that you get the best deal available. Make an enquiry with us and we will match you with your ideal mortgage advisor for free.

The right mortgage broker can help you make sure your mortgage repayments are as affordable as possible. They can do this by making sure you end up with the most competitive interest rate available, choose the right product type and agree a term length that’s right for you.

We offer a free broker-matching service that will take your needs and circumstances into account to pair you up with the advisor who’s best positioned to help you get the mortgage you need, namely one with favourable rates and affordable repayments.

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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