Enter the amount borrowed, the annual interest rate and the term to get your monthly payment, the total interest over the life of the loan, and a year-by-year breakdown of how the balance falls. Adding an extra monthly payment shows immediately how much interest and time it saves.
A fixed-rate loan uses the amortisation formula P = L x r / (1 - (1 + r)^-n), where L is the amount borrowed, r is the monthly rate and n is the number of months. Every instalment is the same size; what changes is the split between interest and principal.
Interest is charged on the balance outstanding, which is largest at the start. In the first year of a 30-year mortgage, most of each payment is interest. An extra payment made then removes principal that would otherwise have accrued interest for three decades. The same payment made in year 25 saves almost nothing. Try the extra payment field: modest amounts often cut years off the term.
Principal and interest only. A real mortgage payment usually also carries property tax, buildings insurance and, below a certain deposit, mortgage insurance. Arrangement fees and early repayment charges are not modelled either, and the latter can make overpaying uneconomic - check your agreement before acting on the saving shown here.
With the amortisation formula P = L x r / (1 - (1 + r)^-n), where L is the loan amount, r is the monthly interest rate (annual rate divided by 12) and n is the number of monthly payments. Every payment is the same size, but the split between interest and principal shifts towards principal over time.
Interest is charged on the outstanding balance, which is at its largest at the start. As the balance falls, the interest portion of each fixed payment shrinks and the principal portion grows. This is why overpaying early saves far more than overpaying late.
No. It calculates principal and interest only. A real mortgage payment often also includes property tax, homeowners insurance and sometimes mortgage insurance, which can add a substantial amount on top.
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