The monthly payment on a fixed-rate loan is M = P × i ÷ (1 − (1 + i)−n), where P is the amount borrowed, i is the monthly interest rate and n is the number of payments. Borrowing 250,000 at 6.5% over 30 years gives 1,580.17 a month and 318,861 in total interest.
Enter what you are borrowing, the annual interest rate and the term, and this calculator returns the fixed monthly payment, the total interest over the life of the loan, and the first year of the amortisation schedule. It works for mortgages, car finance, personal loans and anything else repaid in equal instalments. If you are comparing two rates, the percentage calculator turns the difference into a percentage change; if you are checking affordability against your pay, the salary calculator gives the monthly figure to compare it with.
Loan & Mortgage Calculator
Checked against: 250,000 at 6.5% over 30 years = 1,580.17 per month; 318,861.22 total interest Last reviewed:
- Total interest
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- Total repaid
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Sources and method
- Mortgage calculator (amortisation formula) - Wikipedia
- Mortgages - Consumer Financial Protection Bureau
An illustration for general information, not financial advice, a quotation or an offer of credit. Figures from a lender or employer will differ.
The amortisation formula
A fixed-rate loan is repaid with a constant monthly payment, calculated so that the balance reaches exactly zero on the final instalment:
M = P × i ÷ (1 − (1 + i)−n)
- M is the monthly payment
- P is the principal, the amount borrowed
- i is the monthly interest rate — the annual rate divided by 100, then by 12
- n is the total number of monthly payments — years multiplied by 12
The two conversions catch people out. A 6.5% annual rate is 0.065 as a decimal and 0.00541667 per month. A 30-year term is 360 payments, not 30.
A worked example
Borrowing 250,000 at 6.5% over 30 years:
- i = 6.5 ÷ 100 ÷ 12 = 0.00541667
- n = 30 × 12 = 360
- M = 250,000 × 0.00541667 ÷ (1 − 1.00541667−360) = 1,580.17
Over the full term you pay 360 × 1,580.17 = 568,861.22, of which 318,861.22 is interest. You repay more than twice what you borrowed, which is the number most people do not see until they run it.
How the payment splits over time
Every payment is the same size, but what it does changes completely across the term.
Interest is charged on the outstanding balance. At the start that balance is at its maximum, so the interest portion is at its maximum too. On the loan above, the very first payment breaks down as 1,354.17 interest and 226.00 principal — less than a sixth of it reduces the debt.
As the balance falls, the interest charged falls with it, and because the payment stays fixed, more of it goes to principal each month. By the final year almost all of it is principal. This is why the balance drops so slowly at first and then accelerates, and why selling or refinancing early in a long mortgage returns very little equity.
What the rate and the term actually cost you
Both levers matter, and it is worth seeing them side by side. All figures are for 250,000 borrowed.
- 5.5% over 30 years — 1,419.47 a month, 261,010 total interest
- 6.5% over 30 years — 1,580.17 a month, 318,861 total interest
- 7.5% over 30 years — 1,748.04 a month, 379,293 total interest
- 6.5% over 15 years — 2,177.77 a month, 141,998 total interest
Two things stand out. A single percentage point on the rate moves the lifetime cost by roughly 60,000. And halving the term more than halves the interest — the 15-year option costs about 598 more each month but saves close to 177,000 overall, because the balance spends far less time accruing interest.
Monthly payment by amount and rate
For shorter loans — cars, personal loans, consolidation — the same formula gives these payments over five years.
| Borrowed | 5% | 6% | 7% | 8% | 10% | 12% |
|---|---|---|---|---|---|---|
| 10,000 | 188.71 | 193.33 | 198.01 | 202.76 | 212.47 | 222.44 |
| 20,000 | 377.42 | 386.66 | 396.02 | 405.53 | 424.94 | 444.89 |
| 30,000 | 566.14 | 579.98 | 594.04 | 608.29 | 637.41 | 667.33 |
| 50,000 | 943.56 | 966.64 | 990.06 | 1,013.82 | 1,062.35 | 1,112.22 |
| 100,000 | 1,887.12 | 1,933.28 | 1,980.12 | 2,027.64 | 2,124.70 | 2,224.44 |
| 250,000 | 4,717.81 | 4,833.20 | 4,950.30 | 5,069.10 | 5,311.76 | 5,561.11 |
Overpaying
Any payment above the required amount goes straight against the principal, and that principal stops generating interest from that moment on. The effect compounds.
On the 250,000 loan at 6.5%, adding 200 a month clears the debt in roughly 22 years rather than 30 — nearly eight years earlier, for an extra 200 a month.
Two cautions. Check whether your agreement carries early repayment charges, which are common on fixed-rate deals. And make sure the lender applies overpayments to the principal rather than holding them as advance payments, which achieves far less.
What this calculator leaves out
The figure here is principal and interest only. A real monthly housing payment usually also includes:
- Property tax, often collected monthly into an escrow account
- Buildings and contents insurance
- Mortgage insurance, commonly required when the deposit is below 20%
- Service charges or association fees on flats and managed developments
- Arrangement, valuation and legal fees, paid up front rather than monthly
Together these can add a meaningful amount to the monthly outgoing. Treat the number here as the loan component and get a full illustration from a lender before committing.
Common mistakes
- Entering the annual rate as the monthly rate. Divide by 12 first, or the payment comes out roughly twelve times too high.
- Entering the term in years where months are expected. 30 payments instead of 360 produces a wildly different answer.
- Comparing offers on the monthly payment alone. A longer term always looks cheaper monthly while costing far more overall.
- Ignoring fees. Compare APR rather than the headline rate, since APR includes the charges.
- Assuming a variable rate stays put. If the rate is not fixed for the whole term, model a higher rate too and check you could still afford it.
This calculator is an educational tool. It is not financial advice, not an offer of credit, and not a quotation. Figures from your actual lender will differ.
Frequently asked questions
How is a monthly loan payment calculated?
The standard amortisation formula is M = P x i / (1 – (1 + i)^-n), where P is the amount borrowed, i is the monthly interest rate (the annual rate divided by 12 and by 100), and n is the total number of monthly payments. The result is the fixed payment that clears the debt exactly at the end of the term.
Why is so much of my early payment going to interest?
Interest is charged on the balance outstanding, and at the start the balance is at its largest. On a 250,000 loan at 6.5% over 30 years, the first payment of 1,580.17 is 1,354.17 interest and only 226.00 principal. As the balance falls the split gradually reverses.
Does a shorter term save money?
Substantially, provided you can afford the higher payment. The same 250,000 at 6.5% costs 1,580.17 a month over 30 years and 2,177.77 over 15. The shorter term costs about 598 more each month but roughly 177,000 less in total interest.
What does this calculator not include?
It shows principal and interest only. A real mortgage payment usually also includes property tax, buildings insurance, and often mortgage insurance and service or association fees. Those can add a significant amount, so treat this figure as the loan portion rather than the full monthly cost.
How much does overpaying actually help?
A great deal, because every extra unit goes straight against the principal and stops accruing interest immediately. Adding 200 a month to that same 250,000 loan clears it in about 22 years instead of 30. Check first that your agreement allows overpayment without penalty.
What is the difference between interest rate and APR?
The interest rate is the cost of borrowing the money alone. The APR folds in fees and certain charges as well, so it is usually slightly higher and is the more honest figure for comparing offers from different lenders.
Is this calculator suitable for car loans and personal loans?
Yes. Any loan that is repaid in equal instalments over a fixed term uses the same amortisation maths, so car finance, personal loans and student loans on standard repayment all work here.
What happens if the interest rate is zero?
The formula divides by zero, so the calculator switches to simply dividing the amount by the number of payments. A 12,000 interest-free loan over 24 months is 500 a month, with nothing paid in interest.