Compare Mortgages Money Saving Expert

Mortgage Payment Formula:

\[ PMT = P \times \frac{r}{12} \times \frac{(1 + \frac{r}{12})^{12 \times t}}{(1 + \frac{r}{12})^{12 \times t} - 1} \]

Monthly Payment (PMT):

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1. What Is The Mortgage Payment Formula?

The mortgage payment formula calculates your fixed monthly payment for a mortgage loan based on the principal amount, interest rate, and loan term. This formula helps you compare different mortgage options effectively.

2. How Does The Calculator Work?

The calculator uses the mortgage payment formula:

\[ PMT = P \times \frac{r}{12} \times \frac{(1 + \frac{r}{12})^{12 \times t}}{(1 + \frac{r}{12})^{12 \times t} - 1} \]

Where:

\( PMT \) — Monthly payment (GBP)
\( P \) — Loan principal amount (GBP)
\( r \) — Annual interest rate (decimal)
\( t \) — Loan term in years

Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, accounting for both principal and interest.

3. Importance Of Mortgage Comparison

Details: Comparing mortgage options using Money Saving Expert guidelines helps you find the most cost-effective loan, potentially saving thousands of pounds over the life of your mortgage.

4. Using The Calculator

Tips: Enter the loan amount in GBP, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's included in the monthly payment?
A: This calculation includes principal and interest only. Your actual payment may include additional costs like property taxes and insurance.

Q2: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid. Longer terms mean lower monthly payments but more total interest.

Q3: Should I choose a fixed or variable rate?
A: Fixed rates provide payment stability, while variable rates may offer lower initial rates but carry uncertainty about future payments.

Q4: How much deposit do I need?
A: Typically 5-20% of the property value, with better rates available for larger deposits.

Q5: Are there additional mortgage fees?
A: Yes, most mortgages have arrangement fees, valuation fees, and potentially early repayment charges.