Mortgage Calculator

The monthly payment uses the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. This formula ensures you pay the same amount each month with a gradually shifting ratio of principal to interest.

The 28% rule is a guideline suggesting your monthly housing costs (mortgage, insurance, taxes) should not exceed 28% of your gross monthly income. This calculator uses this rule to estimate the maximum home price you can afford at your current interest rate and loan term. Lenders may use slightly different thresholds, but 28% is the standard benchmark.

Extra monthly payments go directly toward the principal balance, reducing the amount of interest charged in future months. Even a modest extra payment of 100-200 per month can shave years off a 25-year mortgage and save tens of thousands in interest. The savings compound because each extra payment reduces the principal that accrues interest every subsequent month.

An amortization schedule is a month-by-month table showing how each payment is split between principal and interest. Early in the loan, most of your payment goes to interest. Over time, the principal portion grows and the interest portion shrinks. The schedule also shows your remaining balance after each payment, helping you track how quickly you are building equity.

UK Stamp Duty Land Tax (SDLT) is calculated in bands. You pay nothing on the first 250,000, 5% on the portion from 250,001 to 925,000, 10% from 925,001 to 1,500,000, and 12% above 1,500,000. First-time buyers get additional relief. This calculator uses the standard non-first-time-buyer rates as a baseline estimate.