How a UK repayment mortgage works
A repayment mortgage — the standard capital-and-interest deal in the UK — is cleared in full by the end of its term through equal monthly payments. Each payment does two jobs: it covers the interest charged on the outstanding balance that month, and it puts the rest toward reducing the capital you borrowed.
Because interest is charged on the balance, and the balance is largest at the outset, the early payments are weighted heavily toward interest. As the capital falls, the interest share shrinks and more of each payment chips away at the balance, so the loan clears slowly at first and then accelerates.
What the numbers show
The headline is your level monthly payment in pounds. Total interest is the lifetime cost of borrowing on top of the loan, and total repaid is capital plus interest combined.
The chart splits the total repaid into the capital you actually borrowed and the interest paid to the lender. Over a long term at a typical rate, the interest slice can be surprisingly large — a useful prompt to consider overpaying or a shorter term.
Fixed terms and reverting rates
UK mortgages usually combine a long overall term with a much shorter initial rate deal.
- A fixed or tracker rate often lasts two to five years before reverting to the lender’s standard variable rate.
- On reversion the rate — and your payment — typically rises, so many borrowers remortgage near the end of the deal.
- This calculator assumes a single constant rate across the whole term, so it does not model reversion or remortgaging.
- Many lenders allow penalty-free overpayments up to about 10% a year, which can cut the term and interest.
What is not included
This estimate covers capital and interest only. It excludes arrangement and valuation fees, buildings insurance, ground rent or service charges on leasehold property, and Stamp Duty Land Tax on purchase. Confirm the figures with a lender or broker. This is general information, not financial advice.
Formula
r = annualRate/100/12; n = years×12; payment = P·r·(1+r)ⁿ / ((1+r)ⁿ − 1)Frequently asked questions
- Is this for a repayment or interest-only mortgage?
- This models a repayment (capital and interest) mortgage, where the balance is fully cleared by the end of the term.