How is my monthly mortgage payment calculated?

The lender charges interest on what you still owe, then sets a level monthly payment that clears both the loan and the interest by the end of the term. Interest is usually worked out daily on the outstanding balance, so as the balance falls, less of each payment is interest and more pays off the loan. Our mortgage repayment calculator does the maths for you.

Why is my first mortgage payment higher than the rest?

Your first payment often includes extra interest for the days between completion and your first payment date, on top of a normal month. Mortgages are paid in arrears, so the first payment usually lands at the start of the second month after you complete, and it can be larger than the others. It settles to the normal amount after that.

Will my mortgage payment change?

On a fixed rate it stays the same until the deal ends, usually after two or five years. You then move to the lender's standard variable rate, which the lender sets and is usually higher, so many people remortgage. On a tracker rate it follows the Bank of England base rate, which is reviewed about eight times a year.

Does a bigger deposit lower my payment?

Yes. A bigger deposit means a smaller loan, so the monthly payment is lower. It also lowers your loan-to-value, which is how much you borrow as a share of the price, and a lower loan-to-value can get you a better interest rate, lowering the payment again.

Should I overpay my mortgage or save the money?

It depends. The usual order is to keep an emergency fund and clear any higher-interest debt, such as credit cards, before overpaying. After that, compare your mortgage rate with what your savings could earn: if the mortgage costs more than savings pay, overpaying usually comes out ahead. Check your overpayment allowance first.

How much can I borrow?

A lender decides that after checking your income and your regular outgoings, rather than just a multiple of your salary. They also stress test the loan, checking you could still afford it if rates rose. It is worth getting a rough figure before you start house-hunting.

Are these figures a mortgage offer?

No. They are estimates to help you plan, not financial advice and not an offer. A lender decides your actual rate and how much you can borrow.

How mortgage repayments work

A mortgage repayment is the amount you pay your lender each month. On the most common type, a repayment mortgage, it covers two things: a slice of the amount you borrowed, and the interest the lender charges. Three things decide how big it is: how much you borrow, the interest rate, and how long you take to pay it back.

The short version

Your monthly payment is part of the loan plus interest on what you still owe.
Borrow more, and you pay more. A higher rate or a shorter term also pushes it up.
A longer term lowers the monthly payment but costs more in interest overall.
The payment stays level only while your rate stays the same. Every figure here is an estimate to plan with, not a mortgage offer.

What makes up a repayment

On a repayment mortgage, each monthly payment does two jobs. Part of it pays off the capital (the money you actually borrowed). The rest pays the interest (the lender's charge for lending it to you). Interest is usually worked out daily on the balance you still owe, which is why paying the loan down faster saves interest.

Early on, most of the payment is interest, because you still owe almost the full amount. As the balance falls, more of each payment goes towards the capital. The monthly figure usually stays level the whole time, as long as your interest rate does not change, but what sits inside it shifts from mostly interest to mostly capital. The calculator below shows that split for your own numbers.

What changes your monthly payment

Four things move the number up or down:

The loan size. That is the property price minus your deposit. A bigger deposit means a smaller loan and a smaller payment.
The interest rate. The percentage the lender charges. A higher rate means a higher payment.
The term. The number of years you take to pay it back, commonly anywhere from 25 to 40 years. A longer term lowers the monthly payment but adds interest over time.
The repayment type. Repayment or interest-only, which we explain below.

Work out your own

Put your numbers in below for an instant monthly figure. Change the rate and term to see how much they move it.

For the total interest and a year-by-year breakdown, open the full mortgage repayment calculator.

Repayment vs interest-only

On a repayment mortgage you pay off the loan and the interest, so you owe nothing at the end of the term. On an interest-only mortgage you pay just the interest each month, so the payment is lower, but you still owe the full amount at the end and need a separate plan to repay it. Very few interest-only deals are offered for ordinary homes now; they are mainly used for buy-to-let or some later-life lending. Most residential mortgages in the UK are repayment.

	Repayment	Interest-only
Monthly payment	Higher	Lower
Balance at the end	Cleared	Still owed in full
Usually for	Most homeowners	Some buy-to-let and specialist cases

Your first payment

Mortgages are paid in arrears, which means you pay for the month you have just had rather than the month ahead. Your first payment usually lands at the start of the second month after you complete.

That first one is often larger than the rest. It includes the normal month plus extra interest for the days between completion and your first payment date. Once that is out of the way, the payment settles to the regular amount.

Overpaying

Paying more than you have to chips away at the balance faster, so you pay less interest and can finish early. You can usually choose whether an overpayment shortens the term or lowers your monthly payment.

There is normally a limit. Many lenders let you overpay up to about 10% of the balance a year with no charge, called the overpayment allowance. Go beyond it during a deal period and you may face an early repayment charge, a fee that is usually a percentage of the amount you repay and often tapers over the deal, for example from 5% down to 1%. Always check the terms of your own deal first.

Overpaying is not always the best use of spare money. The usual order is to keep an emergency fund and clear higher-interest debt first, then weigh overpaying against saving, depending on which rate is higher.

When your deal ends

Most fixed rates last two or five years, not the whole mortgage term. When a fixed deal ends, you move onto the lender's standard variable rate (SVR), unless you switch. The SVR is set by the lender and is usually higher than the deal you were on. It only loosely follows the Bank of England base rate, so it is not the same as a tracker.

You have two main ways to avoid the jump: remortgage (move to a new deal, sometimes with a different lender) or take a product transfer (a new deal with your current lender). It is worth starting to look around six months before your deal ends. A tracker rate is different again: it follows the Bank of England base rate, which is reviewed about eight times a year, so the payment can move up or down.

Common questions

How is my monthly mortgage payment calculated?: The lender charges interest on what you still owe, then sets a level monthly payment that clears both the loan and the interest by the end of the term. Interest is usually worked out daily on the outstanding balance, so as the balance falls, less of each payment is interest and more pays off the loan. Our mortgage repayment calculator does the maths for you.
Why is my first mortgage payment higher than the rest?: Your first payment often includes extra interest for the days between completion and your first payment date, on top of a normal month. Mortgages are paid in arrears, so the first payment usually lands at the start of the second month after you complete, and it can be larger than the others. It settles to the normal amount after that.
Will my mortgage payment change?: On a fixed rate it stays the same until the deal ends, usually after two or five years. You then move to the lender's standard variable rate, which the lender sets and is usually higher, so many people remortgage. On a tracker rate it follows the Bank of England base rate, which is reviewed about eight times a year.
Does a bigger deposit lower my payment?: Yes. A bigger deposit means a smaller loan, so the monthly payment is lower. It also lowers your loan-to-value, which is how much you borrow as a share of the price, and a lower loan-to-value can get you a better interest rate, lowering the payment again.
Should I overpay my mortgage or save the money?: It depends. The usual order is to keep an emergency fund and clear any higher-interest debt, such as credit cards, before overpaying. After that, compare your mortgage rate with what your savings could earn: if the mortgage costs more than savings pay, overpaying usually comes out ahead. Check your overpayment allowance first.
How much can I borrow?: A lender decides that after checking your income and your regular outgoings, rather than just a multiple of your salary. They also stress test the loan, checking you could still afford it if rates rose. It is worth getting a rough figure before you start house-hunting.
Are these figures a mortgage offer?: No. They are estimates to help you plan, not financial advice and not an offer. A lender decides your actual rate and how much you can borrow.

About this article

Written by the calcd team. We build UK money calculators and explain the numbers behind them in plain English. We checked this article against MoneyHelper, the Financial Conduct Authority and the Bank of England. The figures here are estimates to help you plan, not financial advice and not a mortgage offer. Your actual rate and payment depend on a lender assessing your circumstances. Last updated June 2026.