How to use this tool
- Choose your currency and enter the amount you plan to borrow.
- Type the yearly interest rate your lender quoted and the length of the loan in years.
- Your monthly payment shows at once, with the total interest and a year-by-year schedule below.
The formula behind your monthly payment
Lenders in the US, UK and India all use the same standard formula for a fixed-rate loan: M = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the amount borrowed, r is the monthly interest rate (yearly rate ÷ 12 ÷ 100) and n is the number of monthly payments. In India this payment is usually called the EMI, or equated monthly instalment.
Why early payments are mostly interest
Each month, interest is charged on the balance still owed. At the start the balance is at its highest, so most of your payment covers interest. As the balance falls, more of each payment goes towards the principal. The schedule above makes this easy to see, and it shows why overpaying in the first few years saves the most money.
What this calculator leaves out
A real mortgage payment can also include property tax, home insurance, PMI in the US or arrangement fees in the UK. Add those to the monthly figure for a full budget. Variable and tracker rates will change over time, so treat the result as an estimate for the current rate.
Frequently asked questions
How is EMI calculated?
EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate and n is the number of months.
How can I lower my monthly mortgage payment?
A longer term, a lower rate or a bigger deposit all reduce the payment. A longer term means you pay more interest overall.
Does this work for car loans and personal loans?
Yes. Any fixed-rate loan repaid in equal monthly instalments uses the same formula.
Is the result exact?
It matches the standard amortization formula. Your lender's figure may differ slightly because of fees, insurance or rounding.
Sources and references
- Consumer Financial Protection Bureau: What is amortization?
- Reserve Bank of India: Fair Practices Code on EMI loans
- MoneyHelper (UK): Mortgage calculator guidance