How the repayment is worked out
A repayment mortgage or loan is paid off in equal monthly instalments over its term. Each payment covers the interest for that month plus a bit of the capital, so the balance falls to zero by the end. The monthly payment is calculated with the standard amortisation formula:
M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12) and n is the number of monthly payments (years × 12).
Total interest
The total interest is your monthly payment × the number of payments, minus the amount you borrowed. A longer term lowers the monthly payment but increases the total interest you pay.
What this calculator does not include
- Fees, insurance, property taxes and any charges added to your loan.
- Variable or introductory rates that change during the term (this assumes a fixed rate).
- Overpayments, offset accounts and early-repayment charges.
Does a longer term save me money?
It lowers your monthly payment but you pay more interest overall. A shorter term costs more per month but far less in total.
Is this an interest-only mortgage?
No — this is a repayment (amortising) loan, where you pay off the full balance by the end of the term.
More money calculators
This calculator uses the standard amortisation formula for a fixed-rate repayment loan and is for general information only — it is not financial advice. It excludes fees, insurance, taxes and rate changes. Confirm figures with your lender. WorldTax is independent.