About the Loan Calculator
This loan calculator is built around the question borrowers rarely ask: not what is the monthly payment, but what does this debt cost in total. Alongside the payment it reports total interest, total repaid, and the cost per unit borrowed — a single number telling you that a 25-year mortgage at 6.5% returns roughly 2.03 for every 1 you borrow. The extra monthly payment field then models overpaying, showing both the shortened term and the interest saved. It suits mortgages, personal loans, car finance and any other fixed-rate amortising debt.
How to use the Loan Calculator
- 1
Enter the Amount borrowed, excluding any deposit you are paying in cash.
- 2
Enter the Annual interest rate on a reducing-balance basis.
- 3
Set the Term in years, anywhere from 1 to 50.
- 4
Optionally add an Extra monthly payment to see the revised payoff date and interest saved.
- 5
Review the repayment summary and the yearly breakdown showing principal, interest and remaining balance.
What people use it for
Testing an overpayment habit
On 250,000 over 25 years at 6.5%, adding 200 a month clears the loan several years early and removes tens of thousands in interest. The note under the summary calculates your own figure.
Working out a deposit's real value
Increasing a deposit reduces the amount borrowed pound for pound, but the interest saved is several times larger. Run the loan at both amounts and compare total repaid, not monthly payment.
Consolidation decisions
Before rolling several debts into one longer loan, check the total repaid figure. A lower monthly payment stretched over a longer term frequently costs more overall.
What the cost per borrowed unit tells you
Interest rates are hard to feel. The cost per borrowed unit stat divides total repaid by the amount borrowed, converting the rate and term into one intuitive multiplier. At 6.5% over 25 years the figure is about 2.03, so every 1,000 borrowed is repaid as roughly 2,030. Shorten the term to 15 years at the same rate and the multiplier drops to around 1.57. Nothing about the interest rate changed; time did the damage. The multiplier is also useful when comparing structurally different offers, such as a lower rate with a longer tie-in versus a higher rate with none. Because it folds rate and term into a single number, it exposes the common sales tactic of advertising affordability by extending the term. It does not include arrangement fees, valuation charges or early repayment penalties, so for a full comparison look at the APR alongside it. All figures here are estimates for planning and are not a substitute for a formal illustration from a lender.
How overpayments compress the schedule
A fixed-rate amortising loan is a schedule of payments, each split into interest on the current balance and a reduction of that balance. An overpayment sidesteps the interest portion entirely and lands wholly on the principal, which means every future month's interest is calculated on a permanently smaller number. The calculator models this by rerunning the schedule month by month with the higher payment until the balance reaches zero, then comparing the total paid against the original plan. The saving is nonlinear: overpaying in year two saves far more than the identical sum overpaid in year twenty, because the earlier payment removes more remaining months of compounding. Two practical caveats. Some lenders cap annual overpayments, often at 10% of the outstanding balance, and charge a fee above that. Others apply overpayments only at the next anniversary rather than immediately, which quietly reduces the benefit. Check both before committing to a schedule.
Tips
- Pick the shortest term whose payment you can sustain in a bad month, not a good one — a shorter term is far cheaper than an equivalent overpayment plan you abandon.
- Compare offers on APR rather than the headline rate, since APR folds in mandatory fees.
- If you overpay, tell the lender whether to shorten the term or reduce the payment; shortening the term saves considerably more interest.