The formula
How to calculate mortgage amortisation
Amortisation is the process by which a mortgage balance falls. The payment is constant, but the share going to interest starts high and declines, which is why the balance barely moves in the early years.
Each month interest is charged on the outstanding balance and the rest of the payment reduces it. In month one of a £250,000 mortgage at 4.5%, £938 of a £1,390 payment is interest — roughly two thirds.
Here is what each field means:
- Mortgage amount
- Interest rate (%)
- Term (years)
- Show balance after (years)
Everything recalculates as you type, and the numbers in the address bar update with it, so a link to this page carries your figures with it.
The order the fields are filled in makes no difference to the result — the calculator recomputes the whole formula from whatever is currently in every field, not step by step. That means it is safe to adjust one number, watch the result change, and adjust it back, without worrying about resetting anything first.
Why mortgage amortisation matters
Most people who look up a mortgage amortisation calculation already have a specific number in mind — a quote, an offer, a target — and want to check it rather than learn the theory behind it. This page is built for that: enter your own figures, see the result immediately, and change any field to see how the answer moves without redoing the arithmetic from scratch each time.
Beyond a one-off check, the same calculation is worth revisiting whenever the underlying numbers change — a new interest rate, a change in income, a different term. Because the figures live in the page's own web address, coming back to update just one field and compare the new result against the old one takes seconds rather than starting again from a blank page.
It is also worth being clear about what a single figure like this can and cannot settle on its own. It answers the specific question the formula was built to answer, and nothing more — a favourable mortgage amortisation result does not automatically mean a decision is a good one overall, since plenty of other factors that a formula cannot capture, from personal circumstances to how comfortable a commitment feels, usually matter just as much as the arithmetic. Use the number as one solid input among several rather than the whole of the decision.
In practice, most people arrive at a page like this one having already tried a version of the calculation by hand or in a spreadsheet, and use the calculator here to confirm it rather than replace it. That is a reasonable way to use it — the two should agree to the last decimal place if the same inputs and the same formula are used, and if they do not, the formula shown above is the one to check your own working against first.
Worked example
Work through the defaults on this page:
- Mortgage amount: 250,000
- Interest rate: 4.5 %
- Term: 25 years
- Show balance after: 5 years
That gives:
- Monthly payment: 1,389.58
- Balance remaining: 219,644.76
- Interest in month one: 937.5
These figures are only the calculator's own starting values, included so the working is visible rather than hidden inside the tool above. Replace them with your own numbers and the same arithmetic applies — nothing about the method changes, only the inputs feeding it.
Reading the result
The balance figure explains why remortgaging feels unproductive. After five years of a 25-year term you have repaid around 12% of the capital, despite having paid in over £83,000.
Where this goes wrong. Assuming a fixed-rate period is the term. A five-year fix on a 25-year mortgage means the rate is fixed for five years; the balance shown is what you will be remortgaging, and at an unknown future rate.
A useful check on any unfamiliar result is to compare it against a rough mental estimate first — round the inputs to convenient numbers and see whether the calculator's answer lands in roughly the same territory. A wildly different figure usually means one of the fields was entered in the wrong unit, most often a percentage typed as a whole number where a decimal was expected, or the reverse.
On a 25-year term at typical rates, somewhere around year eleven or twelve. Shorter terms cross over much earlier because more of every payment is capital from the start.
Yes, and disproportionately. An overpayment goes entirely to capital, so it removes all the future interest that balance would have accrued — on a 25-year mortgage, an early £1,000 overpayment can save more than double that in interest.
It returns monthly payment. With 250,000 mortgage amount, 4.5 % interest rate and 25 years term, that comes to 1,389.58. Change any field and the figure moves with it.
Whenever one of the underlying figures changes — a new interest rate, a different balance, an updated term — since the result only reflects what is currently in the fields. There is no need to keep a separate record of past results; the web address for a filled-in version already carries the figures used to produce it.
Not unless a tax rate or a fee is explicitly one of the inputs above. Where it is not, the figure shown is a gross calculation, and any tax due depends on your personal circumstances and current tax rules, which are worth checking separately.
The arithmetic itself is exact — the calculator applies the formula shown above precisely, with no rounding until the final figure is displayed. The uncertainty, where it exists, is entirely in the inputs: an estimated rate or an approximate balance carries that same approximation through to the result.