Helping you make the most out of your money
Helping you make the most out of your money
For most people with a mortgage, it is likely to be their biggest monthly expenditure. With the recent rise to interest rates, you could see your bill go up.
If you are wondering how much your mortgage has gone up by then using a mortgage repayment calculator can be a huge help.
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Calculate your monthly mortgage repayment amount in three easy steps!
How much do you want to borrow?
What interest rate can you get?
How many years do you need to pay this mortgage off?
Assuming your interest rate stays at for
Make life easier by using the Times Money Mentor mortgage comparison UK tool, rather than working out mortgage repayments yourself.
Mortgage type: Remortgage
Term: Two-year fix
Time remaining on mortgage: 20 years
Amount owed on mortgage: £200,000
House value: £300,000
Our mortgage comparison tool shows that the lowest initial monthly repayments on a £200,000 (£200K) mortgage would be £1,297.91 each month. This is based on a deal with an interest rate of 4.8%.
You would also need to pay £1,034 in mortgage fees.
However, you could choose a slightly higher interest rate fixed at 5.14% and slightly higher repayments at £1,335.43 a month. But you would pay no mortgage fees.
Want to use the repayment calculator for a £100,000 mortgage instead? Just tweak your answers to compare different scenarios. Try our mortgage comparison tool.
The calculation for mortgage repayments depends on the type of loan: whether a capital repayment mortgage or an interest-only mortgage.
With a repayment mortgage, each month you pay off not just the interest owing on your loan, but also part of the “capital”. That is the original amount borrowed.
To calculate monthly mortgage repayments, you therefore need to know the mortgage balance, the interest rate and time left for the mortgage to run.
With an interest-only loan, the calculation is simpler, as each month you only pay interest, while the original amount borrowed remains untouched.
Monthly payments for an interest-only loan are therefore lower than for a repayment mortgage. But borrowers must clear the whole of the original loan when their mortgage ends.
Nowadays, most homeowners take out capital repayment mortgages, but buy-to-let property investors may still use interest only mortgages.
Interest-only loans are more flexible and tax efficient for landlords, with the option of selling the property when they wish to clear the loan.
The Help-to-Buy scheme lets homebuyers in England with at least a 5% deposit top up their mortgage with an equity loan from the government.
They can borrow up to 20% of the value of a new-build property as an equity loan, or up to 40% in London.
For example, someone with a £5,000 deposit might be able to buy a £100,000 brand-new property using a combination of a £20,000 equity loan and a £75,000 mortgage.
Monthly payments for the mortgage would be calculated in the same way as for a capital repayment mortgage.
Payments are likely to end up cheaper than using a repayment mortgage for all the borrowing, as the mortgage itself is smaller. The interest rate may also be cheaper when borrowing a smaller amount.
Meanwhile the equity loan is only repaid after 25 years, at the end of the mortgage term or when selling your home – whichever comes first.
The equity loan is interest free for the first five years. But afterwards you will have to pay a monthly admin fee.
This starts at 1.75% of the loan, and after year six goes up each year to match the Retail Prices Index (RPI) plus one percentage point.
The best mortgage deal for you therefore may not be the one with the lowest interest rate, if it comes with chunky upfront fees.
Depending on your loan amount and length of the deal, you might even save money by taking out a loan at a slightly higher rate, but with lower up front fees.
A mortgage may be:
The best deal may also depend on your personal circumstances and reasons for borrowing.
If you are self-employed or freelance, for example, the best mortgage may depend on how many years you can provide accounts, as different lenders have different requirements.
If you want help finding your way through the mortgage maze, you can always use a suitably qualified mortgage broker.
Find out more about the fifferent types of mortgage and which one is right for you here.
If you already have a mortgage, then switching to a new deal, known as “remortgaging” can bring several benefits. If you now own a bigger chunk of your own home, due to rising house prices, you may face a wider choice of lower interest loans.
Alternatively, you might want to release extra cash for home improvements or switch from an interest-only loan to a repayment mortgage. Some lenders may be willing to chuck in free valuations when remortgaging.
Sticking with the same lender can sometimes mean you avoid all the affordability checks of moving to a new mortgage provider.
However, it’s always worth checking how much you could save elsewhere. We have more in our Guide to remortgaging
Most first-time buyers face an uphill struggle when buying their first home.
Luckily many lenders offer deals specifically for first-time buyers, allowing you to borrow a larger proportion of the property’s value, stretching to 90% or 95%.
Sometimes you can even find 100% mortgages, although usually you will need to find a “guarantor”. This is someone such as a parent willing to step in and make the monthly payments if you can’t.
Further help is available to first time buyers such as Help to Buy equity loans, Lifetime ISAs to boost your deposit, starter home schemes and shared ownership arrangements. We have more in How to get your first mortgage.
When moving up the housing ladder, you may benefit from a significantly bigger deposit, if your old home grew in value.
Borrowing a smaller amount compared to the property price should mean you are eligible for better deals with cheaper interest rates.
Check if your current lender will let you take your current loan with you, or you may face exit penalties when repaying early.
Buy-to-let mortgages are used by people who want to purchase a property and then rent it out to tenants.
Buy-to-let mortgages typically require a larger deposit than an ordinary residential loan and charge higher interest rates.
The best deals for landlords focus on reducing monthly payments, so they can maximise earning from rent.
Buy-to-let repayment mortgages exist, but most investors opt for interest-only loans. Buy-to-let borrowers may also be able to access lower rates when arranging loans across a portfolio of properties. We have more in our Guide to buying a second home.
Paying off your mortgage early has the big advantages that you cut the total cost of your mortgage and own your own home sooner.
If your savings earn less interest than you pay on your mortgage, it makes financial sense to put that money towards your mortgage, while retaining some savings for emergencies.
However, do check your lender’s rules about repayments, to avoid charges. Many lenders limit overpayments to up to 10% of the outstanding mortgage balance each year.
The disadvantage of mortgage early repayment is that you can’t use the money for something else – such as clearing more expensive debts, or ploughing into investments and pensions.
It can also be hard to get money out again, unless you go to the time, trouble and expense of remortgaging or selling the property.
If you are wondering whether you should pay off your mortgage early or invest the money instead check out our article here.
Staying on top of your mortgage repayments is vital if you want to keep a roof over your head. Otherwise, your lender could repossess the property, and sell it to pay off the loan.
Follow these tips and tricks to manage your mortgage repayments:
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Helping you make the most out of your money