Loan Calculator
Monthly repayments, total interest and a full amortisation schedule.
About the loan calculator
Enter the amount, the annual interest rate and the term, and you get the monthly payment, the total repaid, the total interest, and a year-by-year breakdown of how much of each year's payments goes to principal versus interest.
The extra-payment field is the interesting one. Add anything to the monthly payment and the schedule is recalculated month by month, showing how much sooner the loan clears. On a long mortgage the effect is usually far larger than people expect.
The formula, and why early payments feel wasted
The monthly payment comes from the standard amortisation formula:
M = P Γ r Γ· (1 β (1 + r)βn)
where P is the amount borrowed, r the monthly interest rate (annual Γ· 12 Γ· 100) and n the number of monthly payments.
The payment stays constant, but its split does not. Interest is charged on the balance outstanding, which is at its highest at the start β so early payments are mostly interest and barely dent the principal. On a 25-year mortgage at 5.5%, roughly two thirds of the first year's payments are interest. That is also why overpaying early is so much more effective than overpaying later: every pound off the principal now avoids interest for the entire remaining term.
Frequently asked questions
How is a monthly loan payment calculated?
With the amortisation formula M = P Γ r Γ· (1 β (1 + r)^βn), where P is the principal, r the monthly rate and n the number of payments. It produces a fixed payment that clears the balance exactly at the end of the term.
How much does overpaying a mortgage actually save?
More than most people expect, because every extra pound removes interest for the whole remaining term. Enter an amount in the extra payment field and the calculator shows both the interest saved and how much earlier the loan clears.
Why is so much of my early payment going to interest?
Interest is charged on the outstanding balance, which is largest at the start. As the balance falls, the interest portion shrinks and the principal portion grows, even though the payment itself never changes.
Does this include fees, insurance or tax?
No β it calculates principal and interest only. Arrangement fees, buildings insurance, property tax and mortgage insurance are extra, so your actual monthly outgoing will be higher than the figure shown.
What is amortisation?
The process of paying off a debt with regular equal payments that cover both interest and principal. The yearly table above is an amortisation schedule β it shows how the split shifts over the life of the loan.