For a fixed-rate mortgage with equal monthly payments (the most common type):
M = P ร r(1+r)n รท [(1+r)n โ 1]
Skip the math โ use the tool.tl Mortgage Calculator to get your monthly payment, total interest, and full amortization schedule instantly.
| Scenario | Loan Amount | Rate | Term | Monthly Payment | Total Interest |
|---|---|---|---|---|---|
| US (30-yr fixed) | $300,000 | 6.5% | 30 yr | $1,896 | $382,560 |
| UK | ยฃ250,000 | 5.0% | 25 yr | ยฃ1,461 | ยฃ188,300 |
| Japan | ยฅ30M | 0.8% | 35 yr | ยฅ81,443 | ยฅ1.42M |
The larger your loan, the higher the payment. Increasing your down payment directly reduces the principal โ and saves disproportionately more in interest over the life of the loan.
Rate is the biggest driver of total borrowing cost. On a $300,000 / 30-year mortgage:
| Rate | Monthly Payment | Total Interest |
|---|---|---|
| 5.0% | $1,610 | $279,600 |
| 6.5% | $1,896 | $382,560 |
| 7.5% | $2,097 | $454,920 |
A 1% rate difference on a 30-year loan changes total interest by over $100,000. Shop multiple lenders before committing.
A longer term lowers your monthly payment but increases total interest paid:
| Term | Monthly (6.5% / $300K) | Total Interest |
|---|---|---|
| 15 years | $2,613 | $170,340 |
| 20 years | $2,238 | $237,120 |
| 30 years | $1,896 | $382,560 |
A larger down payment shrinks the principal and may qualify you for a lower rate. In the US, putting down 20% eliminates Private Mortgage Insurance (PMI), saving an additional 0.5โ1.5% annually.
| Fixed Rate | Adjustable Rate (ARM) | |
|---|---|---|
| Payment stability | Same every month | Changes after initial fixed period |
| Initial rate | Usually higher | Usually lower |
| Best for | Long-term owners, risk-averse | Short-term plans, rate-drop expectations |
| Risk | Low | Payments can increase significantly |
The tool.tl Mortgage Calculator lets you:
You can also model any loan type (car, personal, business) with the Loan Amortization Calculator.
The standard guideline is 28% of gross monthly income (front-end ratio). Total debt payments (mortgage + all other debts) should stay under 36-43% depending on the lender. Going above 50% significantly strains your budget and emergency fund.
Yes โ significantly. Extra principal payments in early years reduce the base on which future interest is calculated. Even $100/month extra on a 30-year mortgage can save tens of thousands in interest and cut years off the loan.
Refinancing replaces your existing mortgage with a new one, typically to get a lower rate or change the term. It generally makes sense when you can reduce your rate by at least 0.5โ1% and plan to stay in the home long enough to recoup closing costs (usually 2โ3 years to break even).