Mortgage Calculator

A mortgage payment is an amortisation calculation with one extra step in front: the deposit. The tool above takes a property price, a down payment expressed either way, a rate and a term, and gives you the monthly figure plus what it costs over the life of the loan.

How it works

Enter the home price, then the down payment — toggle between a percentage and a cash amount, whichever you actually know. Set the annual interest rate and the term; 15 and 30 years are one tap away, and any whole number of years works.

The tool derives the loan amount as price minus deposit, then applies the standard amortisation formula:

payment = P × r × (1 + r)^n / ((1 + r)^n − 1)

where r is the annual rate divided by 12 and n is the term in months. It reports the monthly payment, the loan amount and the total interest over the full term. A deposit equal to or greater than the price is rejected — there is no loan to price — and so are a zero-length term and a negative rate.

Currency is display only; the arithmetic is the same whatever you are buying in.

What the figure does and does not include

This is principal and interest only. In most markets the amount that actually leaves your account each month is larger, because it bundles:

• Property tax, often collected monthly into an escrow account.
• Buildings insurance, which lenders usually require.
• Mortgage insurance — in several markets this is mandatory below a 20% deposit and adds a meaningful monthly sum until you cross that threshold.
• Service or ground charges on leasehold and apartment purchases.

Add these separately before deciding what you can afford. The gap between the P&I figure and the real monthly outflow is commonly 20–30%.

It also assumes a fixed rate for the whole term. Many mortgages are fixed for an initial period and then revert to a variable rate, so the honest way to use the tool on such a product is twice: once at the fixed rate to see the introductory payment, and once at a plausible reversion rate to see what you would be exposed to afterwards.

Three things the numbers show clearly

Deposit size moves two levers at once. A larger deposit reduces the balance and usually unlocks a better rate band, so the saving is more than proportional. Compare 10% and 20% on the same price to see the effect.

Term length is the expensive choice. Run 30 years and 15 years at the same rate: the monthly payment rises by roughly 50%, and the total interest falls by more than half. Whether the shorter term is right depends on cash-flow headroom, but the trade should be made with both numbers visible.

Rate sensitivity is brutal at long terms. One percentage point on a 30-year loan typically changes the monthly payment by around 10% and the total interest by far more, because the exponent amplifies it. This is why affordability is stress-tested against a higher rate than the one on offer.

The wider picture

Mortgage rates track long-dated funding costs rather than the overnight policy rate, which is why they can move ahead of, or against, a central bank decision. The loans themselves are rarely held to maturity by the originating lender — they are pooled and sold on, and that secondary market is a large part of what sets the price offered to borrowers. Capital markets fundamentals explains how those instruments are issued and traded, and introduction to financial markets covers the rate mechanics underneath.

Related tools

For an unsecured or instalment loan without a deposit step, use the loan calculator, which shares the same engine. To model savings growing toward a deposit, use compound interest.