Simple Loan Calculators

Mortgage interest is calculated using an amortization formula. Each monthly payment covers both interest and principal repayment. In the early years, a larger portion of your payment goes towards interest, while in later years more goes towards paying off the principal. The formula ensures that the loan is fully repaid by the end of the term.

LTV ratio is the percentage of the property value that you borrow as a mortgage. For example, if you buy a £300,000 property with a £60,000 deposit, your LTV is 80%. A lower LTV usually means access to better interest rates, as the lender sees less risk. Most lenders require at least a 5-10% deposit.

An amortization schedule is a detailed table showing each payment over the life of your loan. It breaks down how much of each payment goes towards interest versus principal, and shows your remaining balance after each payment. This helps you understand exactly how your debt decreases over time.

A fixed-rate mortgage locks your interest rate for a set period (typically 2 or 5 years), meaning your monthly payments stay the same regardless of changes to the Bank of England base rate. A variable-rate mortgage can change at any time, which means your payments could go up or down. Fixed rates offer certainty for budgeting, while variable rates may start lower but carry more risk. Our calculator uses a single rate for the full term, so for variable-rate estimates, use your current or expected average rate.

The minimum deposit for most UK mortgages is 5% of the property price, though some government schemes may allow less. However, a larger deposit gives you access to lower interest rates and reduces your monthly payments. At 10% deposit you will see noticeably better rates, and at 25% or more you typically access the best deals available. A larger deposit also means borrowing less overall, so you pay less interest over the life of the mortgage.

APR (Annual Percentage Rate) includes not only the interest rate but also any mandatory fees and charges spread over the loan term. This gives you a more accurate picture of the total cost of borrowing. The interest rate is just the cost of borrowing the money itself, while APR reflects the true overall cost. When comparing loan or mortgage offers, APR is generally a better indicator than the headline interest rate alone.

The Bank of England base rate influences the interest rates that lenders offer. When the base rate rises, variable and tracker mortgage rates typically increase, meaning higher monthly payments. Fixed-rate mortgages are not affected during their fixed period, but when you remortgage, the available rates will reflect the current base rate. Keeping an eye on base rate trends can help you decide whether to choose a fixed or variable rate mortgage.

Remortgaging means switching your existing mortgage to a new deal, either with your current lender or a different one. You should consider it when your fixed-rate period ends (as you will move to your lender's standard variable rate, which is usually higher), when interest rates have dropped significantly, when your property has increased in value (giving you a lower LTV), or when you want to release equity for home improvements.

With a repayment mortgage, each monthly payment covers both interest and a portion of the loan, so the mortgage is fully paid off at the end of the term. With an interest-only mortgage, you only pay the interest each month and must repay the full loan amount at the end. Interest-only mortgages have lower monthly payments but require a solid repayment plan for the capital. Our calculators use repayment (amortizing) calculations by default.