Breakdown
How it works
A repayment mortgage charges interest on the outstanding balance each month and sets a fixed payment that clears the balance exactly at the end of the term. Early payments are mostly interest; the split reverses over time. Overpaying shortens the term rather than reducing the payment, which is why even small extra amounts save a lot of interest.
Formula
Worked example
350,000 price, 70,000 deposit (80% LTV), 4.5% over 25 years → payment 1,556 a month, total interest 186,900. Overpaying 200 a month clears it about 4½ years early and saves roughly 38,000.
Frequently asked questions
How is a mortgage payment calculated?
With the standard annuity formula: loan × monthly rate × (1 + rate)^months ÷ ((1 + rate)^months − 1). The payment is fixed for the deal period; it changes when your rate changes.
Does a bigger deposit lower my payment?
Yes, twice over: a smaller loan, and a lower LTV band usually gets a lower rate. Rates step down at 90%, 85%, 80%, 75% and 60% LTV with most lenders.
Should I choose a shorter term or overpay?
Overpaying gives the same interest saving as a shorter term but keeps the flexibility to stop. Choose the longest term you are offered and overpay if you can.
What is not included here?
Arrangement fees, valuation and legal costs, buildings insurance and any rate change after a fixed period. Interest-only mortgages pay interest only (loan × rate ÷ 12).
What happens when my fixed rate ends?
You move to the lender's standard variable rate, usually 2–4 points higher. Re-run the calculator with the new rate and the remaining balance and term to see the jump.