How to use this loan calculator
Enter the amount you are borrowing, the annual interest rate, and the term in years. The monthly payment appears immediately, along with the total interest you will pay over the life of the loan — which for a long mortgage is frequently more than the amount borrowed.
The calculation is the standard amortising loan formula used by every bank: a fixed monthly payment where the split between interest and principal changes every month. It applies equally to mortgages, car finance, personal loans and student loans on a repayment plan.
The extra payment field is the one to experiment with
Enter any amount in "extra payment each month" and the tool shows you two numbers that change how people think about their debt: the interest saved, and the time cut off the term.
On a $250,000 mortgage at 5.5% over 30 years, the payment is about $1,420 and the total interest is roughly $261,000 — more than the house. Add just $100 a month and you save around $45,000 in interest and clear it nearly three years early. Add $300 and you save close to $100,000 and finish seven years early.
The reason the effect is so disproportionate is that every extra dollar goes entirely to principal. It permanently removes that dollar from the balance, so it stops generating interest for every remaining month of the term. An extra $100 paid in month one of a 30-year loan avoids roughly $400 of future interest at 5.5%. The same $100 paid in year 25 avoids almost nothing. Extra payments are worth most when made earliest.
Reading the amortisation schedule
Switch to "First 24 months" to see the split that surprises most first-time borrowers. In month one of the default example, about $1,146 of the $1,420 payment is interest and only $275 touches the balance. That ratio inverts slowly. On a 30-year mortgage you do not reach the point where more than half your payment goes to principal until around year eighteen.
This is also why selling in the first few years feels like you have paid a lot and owe almost the same. You have — the early years are mostly interest by design, because interest is charged on the outstanding balance and the balance starts at its maximum.
The yearly view condenses the whole term. The CSV export gives you the full month-by-month figures for a spreadsheet, useful for tax records or for modelling scenarios the calculator does not cover.
Term length: the trade-off in numbers
A shorter term means a higher payment and dramatically less interest. Same $250,000 at 5.5%: over 30 years you pay $1,420 a month and $261,000 in interest. Over 15 years you pay $2,043 a month — 44% more — but only $117,000 in interest, saving $144,000.
The case for the longer term is flexibility, not cost. A 30-year mortgage with voluntary extra payments gives you the 15-year outcome when you can afford it and a low mandatory payment when you cannot. The case against is human: most people do not make the extra payments. Set up a standing order rather than relying on remembering.
What this calculator does not include
The figure shown is principal and interest only. Your actual monthly outgoing on a mortgage will be higher, often substantially:
- Property tax — in many places collected monthly into an escrow account alongside the mortgage payment
- Buildings insurance — usually mandatory as a condition of the loan
- Mortgage insurance — commonly required where the deposit is under 20%, and worth knowing when it can be cancelled
- Service charges and ground rent — for flats and leasehold properties
- Arrangement, valuation and legal fees — one-off, but often several thousand
It also assumes a fixed rate for the whole term. Variable-rate and tracker mortgages, and fixed-rate deals that revert to a standard variable rate after two or five years, will not follow this schedule past the fixed period. Model the worst case by re-running the numbers at a higher rate for the remaining balance and term.
Before you make extra payments
Check two things. First, whether your lender charges an early repayment penalty — many fixed-rate deals cap overpayments at 10% of the balance per year and charge a percentage above that. Second, whether you have higher-interest debt elsewhere. Overpaying a 5% mortgage while carrying 22% credit card debt costs you money; clear the expensive debt first.
Not financial advice. This calculator is an educational tool that models a simplified scenario. Real outcomes depend on fees, taxes, inflation and market behaviour that no calculator can predict. Speak to a regulated adviser before making a financial decision.