Mortgage Rate Calculator UK

UK Mortgage Payment Formula:

\[ PMT = PV \times \frac{r}{1 - (1 + r)^{-n}} \]

Monthly Payment (PMT):

Total Payment:

Total Interest:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the UK Mortgage Payment Formula?

The UK mortgage payment formula calculates the fixed monthly payment (PMT) required to fully amortize a loan (PV) over a specified term at a given interest rate. This is the standard calculation used by UK lenders for repayment mortgages.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

\[ PMT = PV \times \frac{r}{1 - (1 + r)^{-n}} \]

Where:

\( PMT \) — Monthly payment (GBP)
\( PV \) — Loan principal amount (GBP)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (term in years × 12)

Explanation: The formula calculates the fixed payment needed to pay off the loan with interest over the term, with most of the early payments going toward interest.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payments helps with budgeting and comparing different loan options. It shows how much you'll pay in total and how much goes to interest versus principal.

4. Using the Calculator

Tips: Enter the loan amount in GBP, annual interest rate as a percentage (e.g., 3.5 for 3.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Are UK mortgage rates compounded monthly?
A: Yes, UK mortgages typically use monthly compounding for repayment calculations.

Q2: Does this include insurance or taxes?
A: No, this calculates only the principal and interest payment. UK mortgages may have additional costs like buildings insurance.

Q3: What's the difference between repayment and interest-only?
A: This calculator is for repayment mortgages where you pay both principal and interest. Interest-only mortgages have lower payments but require a separate repayment plan.

Q4: How does term length affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms reduce monthly payments but increase total interest paid.

Q5: Are there early repayment charges?
A: Many UK mortgages have early repayment charges, especially during fixed-rate periods. Check with your lender.