How Fast Can You Pay Off Your Home?

Calculate Your Monthly Payments to Reach Your Goal

The following calculator uses JavaScript to instantly update loan payments based on changing any inputs. You can use it many different ways to figure your mortgage.

Change Loan Term: If your initial loan term was 25 years but you would like to pay off the loan in 15 years you can set the loan term to 15 years and it will show you what monthly payment you would need to make to extinguish the debt in 15 years.
Start in Middle of a Loan: Use your current loan balance as the original loan amount, then set the term to how many ever years you would like to pay off the loan in and it will show the needed monthly payment.
Lump Sum: This calcualtor works by showing the impact of regularly recurring payments of a set amount. If you wanted to make a lump sum payment today as well, then you would subtract that lump sum amount from the current loan balance.
Changing Rates: If interest rates rise or fall that can have a dramatic impact on your loan payments. You can adjust the rates and see how your payments would change should you remortgage today, see rates change, or obtain another loan at a different rate in the future.
Adjust Based On Monthly Budget: If you wanted to pay the loan off in 10 years but the monthly payments were too high for your budget then you could set the goal to 11.5 or 12 years and see what the right payment amount is to pay the loan off then.
Combo Usage: As the results appear instantly, you can run multiple scenarios quickly and see, for example, what your monthly payment would be to pay off your remaining balance in x years at y rate.

Mortgage Calculator UK

Mortgage Amount - £

Interest Rate - %

Term - Years

Calculate

Full Monthly Payment

£789.5

Interest Only

£345

Months

300

Total Interest Payable

£56,850.04

There are 12 months in a year, but our calculator is designed to input years and output months. If you would like to enter a set number of months in your goal time use the following conversion chart to convert any additional months into the decmal fraction of a year.

Entering Months as Decimals

one month: .083333
two months: .16667
three month: .25
four months: .33333
five month: .41667
six months:.50
seve month: .58333
eight months: .66667
nine month: .75
ten months: .833333
eleven month: .91667
twelve months: 1.000

Should I Overpay My Mortgage?

Pay Higher Interest Debts First

If you have other higher-interest debts it can make sense to pay those off first. If you have other investments which you are fairly certain will have superior returns, or get tax advantages for contributing to a retirement program it can make sense to fund those other options too.

Emotional Benefits of Overpayment

In general paying extra on your home is not simply just a financial decision. There is an emotional dividend beyond the interest savings in knowing your home is paid off, your family is secure, and you have one less thing to worry about.

Inflation and Interest Rates

Since the early 1980s interest rates have declined secularly in the developed world with central banks getting more aggressive with their market interventions. Globalization, technology and the internet were massive deflationary forces along with families having fewer children. Many of these deflationary benefits have already been felt across the economy and were associated with increasing financial asset prices as interest rates fell.

In response to the global COVID-19 crisis central banks intervened on a scale not seen since at least World War 2. For Valentine's Day the European Central Bank even published a love poem to loose monetary policy.

Roses are red
Violets are blue
We’ll keep financing conditions favourable
‘Til the crisis is through#ECBmyvalentine #ValentinesDay
— European Central Bank (@ecb) February 14, 2021

Money is a social construct. Loss of faith is a nonlinear process.

There's a reason people are bidding up Bitcoin, ridiculous cryptocurrencies, left-for-dead retailers like GameStop, and throwing money at hundreds of SPACs.

Eventually inflation will spill from the capital markets into the broader economy. When it does, the central banks which stoked it via ultra-loose monetary policy may not be able to stop it very easily. Such inflation could cause financial asset prices to drop (due to a higher risk-free benchmark & larger discount rate) while interest rates rise (making the carrying cost of serving debts higher).

Those who had paid extra on their homes will be able to better handle rate rises than those who made the minimum payments and are holding higher levels of debt.

Which is Better: Lump Some or Monthly Payments?

Mortgages charge interest on how much ever debt there is outstanding. Each month you pay off some of the principal and you pay off the interest that accrued that month.

If you make a large lump-sum payment then you are instantly reducing the remaining loan balance from that day forward. For exmample, if you had access to £10,000 and could apply the sum immidiately to a 3% loan then you can calculate how much you will save in interest monthly with the following equation:

monthly interest savings = lump sum * rate / frequency

£10,000 * 0.03 / 12
£10,000 * 0.0025 = £25 saved per month = £300 saved per year

The above example shows the monthly and annual savings you will enjoy with a lump sum payment. Those savings will be this month, next month, this year, next year, etc.

If you instead added an extra £833.33 monthly for a year you would make the same £10,000 overpayment, but it would be stretched out across time & so your savings would be less. Initially you would only save 1/12 of the £25 monthly savings.

If you stretched out the overpayment across multiple years then the monthly interest savings would be lower.

The sooner you can apply extra funds to your loan the more interest expense you save.

If you do not have a large lump sum set aside then paying extra monthly or shifting to accelerated biweekly payments can be advantageous as well. Either way you save on interest, but the sooner you pay exta the more you save.

How Will Changing Rates Impact My Payments?

If you believe interest rates will fall then you could remortgage at lower rates at the end of your fixed introductory rate term.

If you believe interest rates will rise then it makes a lot of sense to make extra payments on your mortgage to reduce the balance as much as possible before rates rise.

We also offer a calculator with amortisation schedules for changing loan rates, so you can see your initial loan repayments and figure out how they might change if interest rates rise.

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