Where your mortgage balance actually is
Amortisation explains why the balance barely moves in the early years. The payment is level, but the split between interest and capital is not.
What this calculator does
- Shows the balance still outstanding after a given number of months.
- Confirms the level monthly payment for the loan, rate and term.
- Makes the shape of the capital and interest split visible.
How the calculation works
The monthly payment on a repayment mortgage is set once, at the level that clears the balance exactly at the end of the term. What changes month by month is what that payment is doing. Interest is charged on the balance outstanding, so at the start — when the balance is at its largest — most of the payment is absorbed by interest and only a small remainder reduces the debt. Each month the balance is slightly smaller, so slightly less interest is charged and slightly more capital is repaid. The effect compounds, which is why the balance curve is shallow at first and steepens noticeably in the second half of the term. Working out the balance at any point means applying the payment forward month by month, or equivalently valuing the remaining payments at the loan's own interest rate.
The rule
Remaining balance = L × (1 + r)^m − P × ((1 + r)^m − 1) ÷ r, where m is the number of monthly payments already made and P is the monthly payment.
Step by step
- Work out the level monthly payment for the original loan, rate and term.
- For each elapsed month, charge interest on the outstanding balance.
- Deduct the payment, so the difference reduces the capital.
- Repeat for the number of months elapsed to give the balance now.
Worked example
A £240,000 mortgage at 4.5% over 25 years, five years in.
What was entered
| Mortgage loan balance | £240,000 |
|---|---|
| Annual interest rate | 4.5% |
| Total mortgage term | 25 years |
| Months already elapsed | 60 |
The arithmetic
- The level monthly payment on £240,000 at 4.5% over 300 months is £1,334.
- Sixty payments of £1,334 total £80,040 paid in.
- The balance after those five years is £210,858.97.
- So £80,040 went in and the debt fell by only £29,141.03 — the rest was interest.
- A fifth of the term has passed but only about 12% of the capital has been repaid.
What the calculator returns
| Monthly payment | £1,334.00 |
|---|---|
| Balance after 60 months | £210,858.97 |
Key assumptions
- One interest rate applies throughout the elapsed period.
- Every payment was made in full and on time, with no overpayments or payment holidays.
Limitations
- A real mortgage that has been remortgaged part-way through will not match this, because the rate changed.
- Overpayments, underpayments and payment holidays all move the balance and are not modelled.
- Some lenders calculate interest daily rather than monthly, which produces small differences.
- Fees added to the loan at the outset are not separated out.
Common questions
Why has my balance hardly moved after five years?
Does this tell me my remortgage loan-to-value?
Why does my lender's figure differ slightly?
Related calculators
- UK Mortgage Calculator — Set up the original payment, loan and total interest.
- Mortgage Overpayment Calculator — See how overpaying changes the shape of the balance curve.
- Loan-to-Value (LTV) Calculator — Turn the remaining balance into a current loan-to-value.
Official sources
Every figure in this guide was checked against the sources below. Where a source could not confirm a figure, it is marked as requiring verification rather than presented as settled.
- Mortgages: how they work — MoneyHelperHow capital and interest repayment mortgages amortise
- MCOB 11.6: Responsible lending, and responsible financing of home purchase plans — Financial Conduct AuthorityMCOB 11.6.18R: lenders must consider likely interest rates over at least five years and must assume a rise of at least 1% over that period, unless the rate is fixed for five years or more