Mortgage Calculator — Step-by-Step Solutions
The Mortgage Calculator helps you estimate monthly payments, total interest, and amortisation schedules for home loans. It supports four modes: monthly payment calculation, affordability analysis, refinance comparison, and full amortisation tables.
Enter your loan amount, interest rate, and term to get instant results with a payment breakdown chart showing principal versus interest over time.
Your calculations will appear here
How to Use the Mortgage Calculator
- Enter the loan amount (purchase price minus your deposit).
- Enter the annual interest rate as a percentage.
- Select the loan term in years (common options are 15, 20, 25, or 30 years).
- Click "Calculate" to see the monthly payment, total interest, and amortisation schedule.
Formula and Theory
The monthly mortgage payment is calculated using the annuity formula: M = P * [r(1 + r)^n] / [(1 + r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments.
At the start of a mortgage, the majority of each monthly payment covers interest. Over time, the proportion shifts so that more of each payment goes toward reducing the principal. This gradual shift is shown in the amortisation schedule.
The total cost of a mortgage equals the principal plus all interest paid over the term. On a 30-year mortgage, the total interest can exceed the original loan amount. Choosing a shorter term increases monthly payments but significantly reduces total interest.
Worked Examples
Example 1: Standard 30-year mortgage
Problem: Calculate the monthly payment for a 250,000 loan at 3.5% over 30 years.
Solution: r = 0.035/12 = 0.002917. n = 360. M = 250,000 * [0.002917 * 1.002917^360] / [1.002917^360 - 1].
Answer: 1,122.61 per month
Example 2: Shorter term comparison
Problem: Compare total interest on 300,000 at 4% for 15 years vs 30 years.
Solution: 15 years: total interest approximately 99,431. 30 years: total interest approximately 215,609.
Answer: The 15-year term saves over 116,000 in interest
Example 3: Real-world: budgeting for a first home
Problem: You can afford 1,500 per month. At 4.5% over 25 years, what is the maximum loan?
Solution: Rearrange: P = M * [(1+r)^n - 1] / [r(1+r)^n]. r = 0.00375, n = 300. P = 1,500 * 166.79 / 1.125 = approximately 269,800.
Answer: Maximum loan of approximately 269,800
Frequently Asked Questions
What is an amortisation schedule?
How does the term length affect total cost?
What is the difference between fixed and variable rate?
Should I make extra payments?
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