Compare repayment and interest-only mortgage costs, interest, LTV, overpayment impact, and the remaining balance.
Repayment mortgages amortise the principal over the term. Interest-only mortgages show the monthly interest and the principal balance still due at the end of the term. The 4.5% starting rate is illustrative; replace it with your lender's quoted rate for a useful estimate. Figures are for illustrative planning purposes. Actual mortgage rates, product fees, stress-test criteria, and early repayment charges depend on individual lender assessments.
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Mortgage Calculator compares repayment and interest-only monthly costs, total interest, Loan-to-Value (LTV), overpayment impact, and the remaining balance with an annual schedule.
Property Price: £300,000, Deposit: £60,000 (LTV: 80%), Interest Rate: 4.5%, Term: 25 Years, Repayment Result: Monthly repayment: about £1,334. Interest-only would be £900/month before the £240,000 principal balance due at term end.
Repayment mortgages use the standard amortisation formula to pay capital and interest over the term. Interest-only mortgages charge the monthly interest and leave the principal due at the end unless overpayments reduce it.
Overpayments directly reduce your remaining principal balance. Because monthly interest is calculated on reduced principal, overpaying reduces total compound interest and shortens the overall loan term.
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