How Remaining Mortgage Balance Is Calculated

Resumo

The mortgage balance calculator tells you how much you still owe after a given number of years. It also shows how much principal you’ve paid off, how much interest you’ve paid, and how much is left to pay. This is useful for understanding your equity position, planning overpayments, or deciding whether to remortgage.

Como funciona

With a repayment mortgage, each monthly payment reduces your balance — but not evenly. In the early years, most of your payment goes to interest and the balance drops slowly. Later, the balance drops faster as more of each payment goes to principal.

There is a closed-form formula to calculate the remaining balance at any point without walking through every month. This gives you an instant answer for any combination of loan amount, rate, term, and years elapsed.

Principal paid vs time elapsed

A common surprise: after paying for 40% of your term, you’ve typically paid off only about 25–30% of the loan. This is because interest front-loading means the principal reduction accelerates over time.

For a £250,000 loan at 4.5% over 25 years:

A fórmula

Derived values

• Principal paid = Original loan − Remaining balance
• Interest paid = (Monthly payment × months elapsed) − Principal paid
• Total still to pay = Monthly payment × remaining months
• Interest remaining = Total still to pay − Remaining balance

Exemplo prático

Entradas explicadas

• Original loan amount — the amount you initially borrowed
• Interest rate — the annual interest rate as a percentage
• Original term — the total mortgage term in years
• Years elapsed — how many years you’ve been paying

Resultados explicados

• Remaining balance — what you still owe right now
• Monthly payment — your fixed monthly repayment
• Principal paid — how much of the original loan you’ve paid off
• Interest paid — how much you’ve paid in interest so far
• Total still to pay — remaining monthly payments summed up
• Interest remaining — how much more interest you’ll pay from now to the end

Premissas e limitações

• The formula assumes a fixed interest rate for the entire term. If your rate has changed (e.g., you remortgaged partway through), the calculation applies to each rate period separately — not across rate changes.
• No overpayments or underpayments are modelled. If you’ve made extra payments, your actual balance will be lower than the formula predicts.
• The calculator uses repayment mortgages only. Interest-only mortgages have a constant balance (equal to the original loan) throughout the term.
• The “years elapsed” is converted to whole months internally. Partial years are not supported.
• The formula produces a theoretical balance assuming all payments were made on time. Missed payments, payment holidays, or rate changes are not accounted for.

Verificação

Accounting identities:

• Principal paid + Remaining balance = Original loan amount
• Principal paid + Interest paid = Total paid so far (Monthly payment × months elapsed)