Amortization Formulas:
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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.
The calculator uses standard UK amortization formulas:
Where:
Explanation: Each payment first covers the interest due, with the remainder reducing the principal balance.
Details: Understanding amortization helps you see how much equity you're building and how much interest you're paying over time.
Tips: Enter your loan amount in GBP, annual interest rate (%), and loan term in years. The calculator will show your monthly payment and breakdown.
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.