Loan Repayment Calculator
Calculate monthly loan repayments, total interest and see how overpayments can save you time and money. Supports repayment and interest-only
Total amount to borrow
Annual percentage rate
Choose how you'll repay the loan
Extra amount paid each month
Monthly Payment
£1,228.17
Total Repayment
£368,452.50
Total Interest Paid
£168,452.50
Amortization Summary
Monthly payment is calculated using the standard mortgage formula and is rounded to the nearest penny.
Monthly Repayment Formula and What It Tells You
A standard repayment loan uses M = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate, and n is the number of monthly payments. A £200,000 loan at 5.5% over 25 years works out at about £1,228 a month and £368,392 in total, of which £168,392 is pure interest. The interest figure is the headline most people miss; over a 25-year mortgage you typically pay close to the original loan amount again in interest.
Interest-only loans work differently: you pay only the monthly interest (£200,000 at 5.5% = £917/month) and owe the entire £200,000 at the end. Total interest over 25 years is £275,000, but you have not reduced the debt at all. This is fine if you have a separate repayment plan (an investment ISA maturing, a property sale), but disastrous if you do not.
Why Overpayments Punch Above Their Weight
Overpaying £200 a month on a £200,000, 25-year loan at 5.5% knocks roughly 6 years off the term and saves around £40,000 in interest. The maths feels disproportionate because each pound of overpayment goes 100% to capital, while a normal monthly payment in year 1 is mostly interest. The earlier in the loan the overpayment lands, the larger the saving.
Most UK lenders allow 10% overpayments per year on fixed-rate mortgages without early repayment charges. Check your specific deal before committing - some loans charge 1% to 5% on overpayments above the allowance, which can wipe out the saving. Use the [Mortgage Overpayment Calculator](/mortgage-overpayment-calculator) for a year-by-year breakdown showing exactly when the savings appear.
Repayment Examples (£200,000 loan, 25 years)
| Rate | Monthly Payment | Total Repaid | Total Interest |
|---|---|---|---|
| 3.5% | £1,001 | £300,372 | £100,372 |
| 4.5% | £1,112 | £333,560 | £133,560 |
| 5.5% | £1,228 | £368,392 | £168,392 |
| 6.5% | £1,350 | £404,873 | £204,873 |
| 7.5% | £1,478 | £443,360 | £243,360 |
Frequently Asked Questions
Should I take a longer term to reduce my monthly payment?
It works in the short term but costs more in the long term. Stretching a £200,000 loan at 5.5% from 25 years to 35 years drops the monthly payment from £1,228 to £1,094, but total interest jumps from £168,392 to £259,496 - around £91,000 extra. A common compromise is to take the longer term for affordability, then overpay aggressively if the budget allows.
What's the difference between a fixed and variable rate?
A fixed rate locks your monthly payment for a set period (usually 2, 5 or 10 years). A variable rate moves with the lender's standard variable rate (SVR) or Bank of England base rate, so the monthly payment changes when rates change. Fixed gives predictability; variable gives upside if rates fall but pain if they rise.
Are interest-only loans still available in the UK?
Yes, but criteria are stricter than they were pre-2008. You typically need a credible repayment vehicle (a maturing investment, a sale of another property, or a clear plan to switch to repayment), a low loan-to-value ratio (often below 75%), and proof of income comfortably above the lender's threshold. Most retail mortgages are repayment by default.
Does the calculator include arrangement fees and other costs?
No, it shows only the principal and interest. Arrangement fees, valuation fees, broker fees and early repayment charges sit on top. A £999 arrangement fee on a 5-year fix adds about £17 a month if rolled into the loan, and significantly more once interest compounds across the full term. Always compare the APRC (annual percentage rate of charge) rather than the headline rate.
Related Tools
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