What is a repayment mortgage?
A repayment mortgage (also called a capital-and-interest mortgage) requires you to pay back a portion of the original loan — the capital — alongside the interest every month. Because the balance falls each month, the interest portion of your payment shrinks over time while the capital portion grows. By the final payment the loan is fully cleared.
This is the most common mortgage type in the UK and the one most lenders recommend because it guarantees the debt is paid off by the end of the term. If you want to check how your payments split down on a granular schedule, view our Mortgage Amortization Calculator.
Repayment vs interest-only mortgages
With an interest-only mortgage your monthly payment is lower — you are only paying the interest, not reducing the capital. However, the full loan amount remains owed at the end of the term and must be repaid in a lump sum. Borrowers usually fund this through an ISA, pension, investments, or the sale of the property. For a more tailored analysis of this route, explore our specialized Interest-Only Mortgage Calculator.
Use the repayment type toggle in this mortgage loan repayment calculator to compare both options side by side with your own figures. If you plan to clear your balance faster through early voluntary contributions, you can run those scenarios with our Mortgage Overpayment Calculator.
How the monthly repayment is calculated
The standard annuity formula is: $$M = P \times \frac{r(1+r)^n}{(1+r)^n - 1}$$ where $P$ is the principal (loan amount), $r$ is the monthly interest rate (annual rate $\div$ 12), and $n$ is the total number of monthly payments (years $\times$ 12). A special case applies when the rate is 0% — in that case the monthly payment is simply the loan divided by the number of payments. If you want to target your exact interest metrics isolated from equity, read more on our dedicated Mortgage Interest Calculator.
Frequently Asked Questions
How is a mortgage repayment calculated?
A repayment mortgage uses the annuity formula: monthly payment = loan × (monthly rate × (1 + monthly rate)^n) / ((1 + monthly rate)^n − 1), where n is the number of monthly payments. Each payment covers the interest accrued that month plus a portion of the capital, so the balance falls to zero by the final payment.
What is the difference between a repayment and an interest-only mortgage?
With a repayment mortgage you pay off both interest and capital each month, so the loan is fully cleared at the end of the term. With an interest-only mortgage your monthly payment covers only the interest — the full original loan remains outstanding at the end and must be repaid separately.
How much does the interest rate affect my monthly repayment?
The effect is significant. On a £200,000 mortgage over 25 years, a rate of 3% gives a monthly payment of around £948, while 5% gives £1,169 and 7% gives £1,414. Use this calculator to compare different rates instantly.
Does a longer mortgage term lower my monthly payment?
Yes — extending the term reduces your monthly payment but increases the total interest paid over the life of the loan. For example, £200,000 at 5% over 20 years costs £1,320/month but £1,169/month over 25 years. The 25-year option saves £151 per month but costs around £25,000 more in total interest.
Can I use this as a house loan repayment calculator or mortgage loan repayment calculator?
Yes. This calculator works for any UK mortgage — whether you call it a house loan, home loan, or mortgage loan. Enter the loan amount, annual interest rate, and term in years to get your monthly repayment, total interest, and total amount repayable.