Estimate monthly payments for a loan or mortgage.
This calculator uses the standard amortising loan formula, the same one banks and mortgage lenders apply. Every payment is identical, but its composition shifts: early payments are mostly interest, later ones are mostly principal.
Payment = P × r ÷ (1 − (1 + r)−n)
where P is the amount borrowed, r is the monthly rate (annual rate ÷ 12), and n is the number of monthly payments.
Because interest is charged on the outstanding balance, the total you repay is very sensitive to the term. Stretching a loan from 15 years to 30 years lowers the monthly payment substantially but can more than double the interest paid.
The rate. On a long mortgage, a difference of half a percentage point is worth tens of thousands over the life of the loan. It is almost always worth shopping the rate before shopping anything else.
The term. A shorter term costs more each month and far less overall. If you can comfortably afford the higher payment, the shorter term is usually the better financial decision — but only if it leaves room for emergencies.
Extra payments. Anything you pay above the scheduled amount goes straight against principal, which removes all the future interest that principal would have generated. A single extra payment per year can shorten a 30-year mortgage by several years.
The figure shown is principal and interest only. A real mortgage payment usually also includes property tax, homeowners insurance, and — if your deposit was small — mortgage insurance. Those can add a meaningful amount to the monthly total, so treat this result as the floor rather than the full cost.
It also assumes a fixed rate. On a variable or adjustable-rate loan the payment changes when the rate resets, and the initial teaser rate is not what you will pay for most of the term.
Finally, check whether your loan carries an early repayment charge. Some lenders penalise overpayments above a certain threshold during the first few years, which can cancel out the benefit of paying down early.