Loan Calculator
The monthly payment, the total interest, and how much of the first payment is interest rather than principal.
Borrowed £250,000.00
Annual rate 5.25%
Term 300 months (25 years)
Monthly payment £1,498.12
Total repaid £449,435.79
Total interest £199,435.79
Interest as a share 79.8%
First payment interest £1,093.75
First payment principal £404.37
Of the first £1,498.12 payment, £1,093.75 is interest and £404.37 comes
off the balance. That ratio shifts every month, which is why the early
years of a long loan pay down so little.
Over the full term the interest adds 79.8% to what was borrowed.
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The monthly payment is the number people ask for. The number that changes how a loan feels is the split inside the first payment: on a 25 year mortgage at 5.25 percent, about three quarters of the first payment is interest and only a quarter comes off the balance.
The amortisation formula hides that behind one figure. This prints both.
How to use
- Put in the amount borrowed and the annual rate.
- Put in the term in years, and extra months if it is not a round number.
- Read the monthly payment, then the first payment split.
Example
250,000 at 5.25 percent over 25 years:
Borrowed £250,000.00
Annual rate 5.25%
Term 300 months (25 years)
Monthly payment £1,498.12
Total repaid £449,435.79
Total interest £199,435.79
Interest as a share 79.8%
First payment interest £1,093.75
First payment principal £404.37Nearly 200,000 of interest on a 250,000 loan, and in month one the balance falls by 404. That ratio improves every month, slowly at first, which is why overpaying early is worth so much more than overpaying late: every pound off the balance now removes 25 years of interest on that pound.
Pitfalls
The rate is nominal, not APR. A lender’s APR folds in arrangement fees and insurance, so it is higher than the rate the payment is calculated from. Use the rate for the payment and the APR to compare offers.
A fixed period is not the whole term. A two year fixed rate on a 25 year mortgage is 23 years at whatever comes next. Run the calculation again at a higher rate to see what the payment could become; that is the stress test lenders do.
Total interest depends on the term more than the rate. Shortening a 25 year term to 20 at the same rate saves far more than shaving a quarter point off the rate, and costs more per month. Try both.
Interest-only loans are not this. This assumes an amortising loan where each payment covers interest and some principal. An interest-only payment is just the balance times the monthly rate, which is the “first payment interest” line here.
Extra payments are not modelled. Each one shortens the term and cuts total interest by more than its own size. The figures here are the no-overpayment case.
Compatibility
Arithmetic in the browser: nothing is uploaded and nothing is stored. The share link carries the figures.
The formula is the standard amortisation one, with the monthly rate taken as the annual rate divided by twelve, which is what lenders in the UK and the US use for monthly payments. A zero rate divides the balance evenly across the term rather than dividing by zero.
Rounding is to the currency’s own precision, so a payment is shown to the penny. Over 300 payments, rounding each one can put the total a few pence out from a lender’s own statement.