Annuity Mortgage Calculator — Fixed Monthly Payment

Loan amount

Annual interest rate

Loan term

Start year

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Monthly payment
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Total interest paid

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Total cost of loan

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Interest as % of loan

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Principal vs Interest over time

About the Annuity Mortgage Calculator

What is an annuity mortgage?

An annuity (repayment) mortgage means each monthly payment covers both interest and a portion of the principal. By the end of the term, the loan is fully repaid. This is the most common mortgage type for residential buyers.

How monthly payments are calculated

The calculator uses the standard amortisation formula: M = P[r(1+r)^n]/[(1+r)^n−1], where P is the loan principal, r is the monthly interest rate, and n is the total number of monthly payments.

Interest vs principal split

Early payments are weighted heavily toward interest. As the balance reduces, more of each payment goes toward principal. The calculator shows your total interest paid over the full term alongside the monthly payment.

Mortgage term Most residential mortgages run 15–30 years. A shorter term means higher monthly payments but significantly less total interest paid.
Overpayments Making overpayments reduces the outstanding principal faster, cutting both the remaining term and total interest. Use the Early Payoff Calculator to model the impact.

Annuity mortgage rates: fixed vs variable

The interest rate on an annuity mortgage significantly affects total cost. Fixed-rate deals lock in a payment for 2, 5, or 10 years, offering budgeting certainty. Variable rates (tracker, discount, or Standard Variable Rate) move with the Bank of England base rate or the lender's own rate, meaning payments can rise or fall. Most UK borrowers currently choose 2 or 5-year fixes.

Fixed rate — certainty for the fix term; typically carry Early Repayment Charges if you leave early
Tracker — follows Bank of England base rate + a margin; payments rise and fall with rate changes
Standard Variable Rate (SVR) — what you revert to after a deal ends; usually the most expensive option
Discount rate — a set percentage below the lender's SVR; moves when the SVR changes

Frequently Asked Questions

What is an annuity mortgage?

An annuity mortgage has a fixed monthly payment throughout the entire loan term. Each payment covers both interest and a portion of the principal. Early on, most of your payment goes toward interest; by the end, most goes toward principal.

How is the monthly payment calculated?

The formula is: Payment = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P = loan principal, r = monthly interest rate (annual rate ÷ 12), and n = total number of monthly payments.

What's the difference between annuity and linear mortgages?

With an annuity mortgage the monthly payment stays the same — predictable budgeting. With a linear mortgage you repay a fixed chunk of principal each month so the payment decreases over time, and you pay less total interest. See our Annuity vs Linear comparison tool for a side-by-side analysis.

What happens if I make overpayments?

Overpayments reduce your outstanding principal, which means less interest accrues in future months. Many annuity mortgages allow overpayments of up to 10% of the balance per year without penalty. Check your mortgage agreement before making extra payments.

How does the interest rate type affect my payments?

With a fixed-rate mortgage your monthly payment stays constant for the fixed term. With a variable or tracker rate, your payment changes whenever the base rate changes. This calculator shows your payment based on the rate you enter — update it to model rate changes.