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Mortgage Amortization Calculator UK

Amortization Formulas:

\[ I_k = B_{k-1} \times r \] \[ P_k = M - I_k \] \[ B_k = B_{k-1} - P_k \]

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1. What is a Mortgage Amortization Calculator UK?

Definition: This calculator shows how your UK mortgage payments are split between principal and interest over time.

Purpose: It helps homeowners understand their repayment schedule and see how much interest they'll pay over the loan term.

2. How Does the Calculator Work?

The calculator uses standard UK amortization formulas:

\[ I_k = B_{k-1} \times r \] \[ P_k = M - I_k \] \[ B_k = B_{k-1} - P_k \]

Where:

Explanation: Each payment first covers the interest due, with the remainder reducing the principal balance.

3. Importance of Amortization

Details: Understanding amortization helps you see how much equity you're building and how much interest you're paying over time.

4. Using the Calculator

Tips: Enter your loan amount in GBP, annual interest rate (%), and loan term in years. The calculator will show your monthly payment and breakdown.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between interest and principal?
A: Interest is the cost of borrowing, while principal is the actual loan amount you're repaying.

Q2: Why does my early payment go mostly to interest?
A: With a higher initial balance, more interest accrues each month, so less goes toward principal early in the loan.

Q3: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter term, or secure a lower interest rate.

Q4: Are UK mortgages different from other countries?
A: UK mortgages typically use annual interest compounding and are usually repayment mortgages (not interest-only).

Q5: Does this include insurance or taxes?
A: No, this calculates only the principal and interest portions of your mortgage payment.

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