How the mortgage calculator works
This calculator uses the standard fixed-rate amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (years × 12). The result is your fixed monthly payment. Total repayment is simply monthly payment multiplied by the number of payments, and total interest is total repayment minus the original loan amount.
What the results mean
The monthly payment is the fixed amount you pay each month for the entire loan term — it covers both principal and interest. Early payments are mostly interest; later payments are mostly principal. The total repayment is the sum of all monthly payments over the life of the loan. The total interest paid shows the full cost of borrowing, which can often exceed the original loan amount on long-term mortgages. Comparing these figures across different loan amounts, rates, and terms is the most effective way to evaluate mortgage options.
Tips for reducing your mortgage costs
A higher down payment reduces the principal and therefore the total interest paid. Choosing a shorter loan term (e.g., 15 years instead of 30) significantly reduces total interest even though monthly payments are higher. Even a small reduction in the annual interest rate — by shopping lenders or improving your credit score — can save tens of thousands of dollars over the life of a 30-year mortgage. Making extra principal payments whenever possible also shortens the effective loan term.