UK repayment mortgage payment.
Monthly payment
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Total interest
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Total paid
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Your breakdown
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Worked example
Take a £250,000 repayment mortgage at a 5 percent annual rate over a 25-year term. The monthly rate is 5 percent divided by 12, and there are 300 monthly payments. Feeding those into the standard repayment formula gives a monthly payment of £1,461. Over the full 300 months you pay £438,443 in total, so the interest cost is £188,443, which is almost as much again as the amount borrowed. That is why even a small cut in rate or a shorter term changes the total dramatically.
How it is calculated
A repayment mortgage uses the standard amortising formula, where the monthly payment is principal times the monthly rate, multiplied by (1 plus the monthly rate) raised to the number of payments, divided by that same compounded factor minus one. The monthly rate is the annual rate divided by 12, and the number of payments is the term in years times 12. Early on most of each payment is interest because the balance is large, and the principal share grows every month as the balance falls. Multiplying the monthly payment by the number of payments gives the total repaid, and subtracting the original loan leaves the total interest. The calculation assumes a fixed rate for the whole term, so real-world reversion rates after a fixed deal will change the figures.