The payment this calculator returns is the principal-and-interest portion of a repayment mortgage: the fixed amount that clears the balance to zero by the final month. It is the number a lender quotes first and the smallest of the numbers you will actually pay, because taxes, buildings insurance and any mortgage insurance sit on top of it.
What a normal principal-and-interest payment looks like
As a rough sanity check, every 100,000 borrowed over 30 years costs roughly 600 a month at 6%, about 530 at 5%, and about 735 at 8%. Multiply by the hundreds of thousands you are borrowing and you have a usable estimate before you touch a calculator.
In the United States the 30-year fixed rate averaged in the mid-6% range through 2025, per Freddie Mac's weekly survey, so a 400,000 loan lands near 2,500 a month in principal and interest alone. Add escrow and most borrowers write a cheque closer to 3,200.
A payment that looks far below those benchmarks usually means the quote is interest-only, has a teaser rate that resets, or excludes escrow. A payment far above them usually means a shorter term, which is a feature rather than a problem.
Three scenarios worth running
Same loan, two rates: 350,000 over 30 years at 6.0% is about 2,098 a month and roughly 405,000 in lifetime interest. At 6.75% the payment rises to about 2,270 and the interest bill to roughly 467,000. Three quarters of a point costs 62,000 over the full term — which is why shopping several lenders beats negotiating the purchase price by a few thousand.
Same rate, two terms: that 350,000 at 6.0% over 15 years costs about 2,954 a month, roughly 856 more, but total interest falls from about 405,000 to about 182,000. If the higher payment is comfortable in a bad year and not just a good one, the shorter term is close to a free 220,000.
Same payment, bigger deposit: putting a further 30,000 down cuts the loan to 320,000, the payment to about 1,918, and usually removes mortgage insurance once you cross 20% equity. The deposit does double work here, and the second effect is often larger than the first.
How the amortisation actually behaves
The payment is level but its composition is not. On that 350,000 at 6%, the first month is about 1,750 interest and 348 principal. It takes roughly 19 years before the principal share overtakes the interest share, which is why selling in year five leaves a balance far higher than a straight-line guess suggests.
This front-loading is why an overpayment made early is worth several times the same overpayment made late. Sending an extra 200 a month from the start on this loan clears it around five years sooner and saves well over 80,000 in interest.
It also explains why refinancing resets more than the rate: a new 30-year term restarts the interest-heavy phase, so a lower rate on a restarted clock can still increase what you pay overall.
Where this formula stops being reliable
The standard amortisation formula assumes a fixed rate for the entire term. On an adjustable-rate mortgage, a tracker, or a UK-style fixed period followed by a reversion rate, the figure here is only valid until the first reset — treat it as the payment for the fixed window and re-run it with the reversion rate to see the downside.
It also assumes monthly compounding at rate divided by twelve. Canadian mortgages compound semi-annually by law, which makes the true payment slightly lower than this calculation for the same quoted rate, and some lenders use daily interest accrual, which makes the timing of your payment matter by a few pounds a month.
Finally, it ignores everything escrowed. Property tax, hazard insurance, private mortgage insurance and any condo or HOA dues are real, recurring and often add 25–40% on top of the principal-and-interest figure. Budget from the full housing payment, never from this line alone.
Jurisdiction and timing caveats
US borrowers should expect the quoted rate and the APR to differ, because APR folds in points and lender fees. Comparing two quotes on rate alone hides a lender who is charging two points for it.
UK borrowers are usually pricing a two- or five-year fix inside a 25- to 35-year term, so the meaningful comparison is the total cost over the fixed period plus the arrangement fee, not the payment over the full term.
Rates move weekly, and a quote is only firm once it is locked. If your lock expires before completion, re-run the payment at the current rate before you commit to a purchase price.
Frequently asked questions
- How is a monthly mortgage payment calculated?
- The lender solves for the level payment that amortises the balance to zero: payment equals principal times r divided by one minus one plus r to the power of minus n, where r is the monthly rate and n is the number of monthly payments. Everything else on your statement — tax, insurance, mortgage insurance — is collected alongside that figure rather than being part of it.
- Why is so much of my early payment going to interest?
- Interest is charged on the balance outstanding, and the balance is at its largest at the start. On a 350,000 loan at 6%, month one splits roughly 1,750 interest to 348 principal; the split only reaches parity around year nineteen.
- What does one percentage point actually cost me?
- On a 350,000 thirty-year loan, moving from 6.0% to 7.0% raises the payment from about 2,098 to about 2,329 and adds roughly 83,000 to lifetime interest. That is the size of the prize for collecting more than one quote.
- Should I include property tax and insurance in this figure?
- Not in this calculator, but absolutely in your budget. Most US lenders escrow them, which commonly adds 25–40% to the amount actually leaving your account each month.
- Does overpaying reduce the payment or the term?
- By default it shortens the term while the payment stays the same, which is where the interest saving comes from. Some lenders will recast the loan and lower the payment instead if you ask after a large lump sum — that helps cash flow but saves far less interest.
Sources
- Freddie Mac Primary Mortgage Market Survey — Weekly US average 30-year fixed rate; averaged in the mid-6% range through 2025.
- Consumer Financial Protection Bureau — mortgage basics — Explains how escrow, points and APR relate to the quoted rate (guidance current 2025).