How to calculate a mortgage payment
A repayment mortgage payment is the amount borrowed multiplied by the monthly interest rate, divided by one minus the discount factor for the whole term. Everything you need is the loan amount, the annual rate and the number of years.
Skip the maths and use the mortgage calculator
The formula
Monthly payment = P × r ÷ (1 − (1 + r)^−n), where P is the amount borrowed, r is the annual rate divided by 12, and n is the number of monthly payments.
Step by step
- Take the amount you are borrowing after any deposit.
- Divide the annual interest rate by 12 to get the monthly rate.
- Multiply the years in the term by 12 to get the number of payments.
- Put the three figures into the formula, or into the calculator below.
Worked example
£300,000 over 30 years at 6%
- Monthly rate = 6% ÷ 12 = 0.005
- Number of payments = 30 × 12 = 360
- Payment = 300,000 × 0.005 ÷ (1 − 1.005^−360)
The monthly payment is about 1,798.65 in whatever currency the loan is in.