Mortgage Calculator

This mortgage calculator helps you understand a home loan before you apply for one. Enter the property price, down payment, interest rate, and term — and instantly see the monthly payment, total interest, and full amortization schedule. Work backwards too: set a comfortable monthly payment to find the maximum property value you can finance, or adjust the term to see how it trades off against the payment size. The early repayment section shows exactly what an extra payment does to your payoff date and total interest bill.

What is a mortgage and how does it work?

A mortgage is a long-term loan secured against real estate. The property itself is the collateral: if the borrower stops making payments, the lender can foreclose and sell the property to recover the debt. That security is what allows lenders to offer rates far below those of unsecured consumer credit.

Four numbers define any mortgage: the property value, the down payment (the share you cover upfront), the interest rate, and the term. The loan amount is simply the difference between the first two. Because mortgages run for decades, even a small change in the rate or term produces a large change in total interest paid — which is why it pays to model the numbers carefully before signing.

Mortgage terms typically run 10 to 30 years. A longer term means lower monthly payments but dramatically more interest over the life of the loan. A 30-year mortgage on the same amount at the same rate can cost nearly twice as much in total interest as a 15-year one.

Down payment and loan-to-value ratio

The down payment is the portion of the purchase price paid from your own funds at closing. Everything above it is financed. The ratio of the loan to the property's value is called the LTV (loan-to-value ratio) — it is one of the first numbers lenders look at when assessing risk.

A down payment of at least 20% (LTV of 80% or below) is the standard threshold in most markets. Below it, many lenders require mortgage insurance — an additional monthly premium that protects the lender, not the borrower, if the loan defaults. This extra cost persists until the balance drops below 80% of the property value, so a larger down payment eliminates it entirely from day one.

Beyond insurance, a higher down payment reduces the loan amount, lowers the monthly payment, and shrinks the total interest bill. It also provides an immediate equity buffer — if property values fall shortly after purchase, a small down payment can leave the borrower underwater (owing more than the home is worth).

Annuity vs. differential payments

Most mortgage markets offer annuity-style repayment as the default, but some lenders and jurisdictions offer differential schedules as well.

• Annuity

  The monthly payment is fixed for the entire term. Early payments are heavily weighted toward interest — in the first years of a 30-year mortgage, principal reduction is very slow. Over time the balance tips, and more of each payment goes toward the principal.

  Simple to budget over decades — the payment never changes.

• Differential

  The principal is divided equally across all months. The interest portion falls as the balance shrinks, so the payment decreases every month. The first payment — and several years of payments after it — will be noticeably larger than an equivalent annuity payment.

  Less total interest paid — but demands strong income in the early years.

On a 20- or 30-year mortgage, the interest savings from a differential schedule can be substantial — tens of thousands in absolute terms. The catch is that the higher early payments must fit within the borrower's income at exactly the point in life when they have just made a large purchase. That is why annuity dominates in practice.

How early repayment changes a mortgage

Because mortgage balances are large and terms are long, extra payments toward the principal have an outsized effect. Interest compounds on the outstanding balance, so every dollar removed from that balance today eliminates years of future interest accrual.

When making an early repayment on a mortgage, you generally choose between:

• Shortening the term — the monthly payment stays fixed, but the loan ends earlier. On a 25-year mortgage, a series of modest extra payments in the first decade can cut years off the end of the schedule and save a significant amount in interest.
• Reducing the payment — the remaining term stays the same, but each subsequent payment is recalculated downward. This frees up monthly cash flow without changing the payoff date.

Mathematically, shortening the term saves more money. But if the mortgage rate is low and the borrower has higher-rate debt elsewhere — or a better use for the freed-up cash — reducing the payment and directing the difference elsewhere can be the smarter move.

The real cost of a mortgage: what to look out for

The interest rate is the largest component of mortgage cost, but not the only one. Several other charges can add meaningfully to the total:

• Origination and closing costs. Lenders charge arrangement fees, valuation fees, legal costs, and title insurance at the point of taking out the loan. These can amount to 2–5% of the loan amount and are often rolled into the principal, on which you then pay interest for the full term.
• Mortgage insurance. If your LTV is above 80%, expect a monthly insurance premium on top of the base payment. This does not reduce the balance — it is a pure additional cost until the LTV threshold is crossed.
• Property taxes and home insurance. In many countries these are collected monthly alongside the mortgage payment via an escrow account. They are not part of the loan, but they are unavoidable costs of ownership that belong in any affordability calculation.
• Rate type risk. Fixed-rate mortgages lock in the rate for the full term. Variable (adjustable) rates start lower but can rise if market rates increase, changing the monthly payment unpredictably. This calculator uses a fixed rate; if you are comparing a variable-rate offer, model a higher rate scenario to stress-test affordability.

Always compare mortgage offers using the APR (Annual Percentage Rate), which incorporates compulsory fees alongside the interest rate. Two offers with the same nominal rate but different fees will have different APRs — the APR shows which one actually costs more.

How much mortgage can you afford?

A widely cited guideline is the 28/36 rule: keep your monthly mortgage payment (principal, interest, taxes, and insurance) below 28% of gross monthly income, and keep total debt payments — mortgage plus all other obligations — below 36%. Lenders often use similar thresholds when calculating how much they will approve.

These are ceilings, not targets. Borrowing at the maximum the bank will offer leaves no room for income disruption, maintenance costs, or rising property taxes. A more conservative approach is to find the maximum the calculator gives you, then shop for something meaningfully below it — the monthly breathing room is worth more over a 25-year term than a slightly larger property at closing.