There are many ways in which you can calculate mortgage repayments. The easiest and quickest way is by going online and using a mortgage calculator tool which you can find pretty much on any bank or mortgage website.
If you want to try and have a go at working out mortgage repayments yourself then the first thing you need to do is calculate your loan amount, which is also known as the principal. You would simply do this by taking the purchase price of the property and minus the deposit funds you have saved from it.
You should then look at a mortgage you’re thinking of applying for to see what the annual interest rate is. This will usually be listed as the initial interest rate. The mortgage term is known as the length of time in which you plan to repay the mortgage. The benefits of having a mortgage term which is longer is that your monthly repayments will be lower. However, the downside is that it will take longer to clear the loan and you will end up paying more in interest.
Below is an easy calculation for mortgage repayments over 30 years:
For every £10,000 you borrow, the monthly repayments will be £40 if your annual mortgage interest is 2.5%. Firstly, you start by dividing your mortgage debt by £10,000, then, multiply your answer by £40 again. As a rule, for every 0.25% increase in your mortgage rate, this will add approximately £2 to your repayments for every £10,000 you have borrowed. If your mortgage interest is 3.0%, you’ll need to add an additional £4 to your repayments for every £10,000, so would then be paying £44 in interest per £10,000 borrowed.
