Quick Answer
A mortgage payment is calculated using the same amortization formula as any loan: M = 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 total number of monthly payments.
What Is Mortgage?
A mortgage calculator estimates your monthly home loan payment based on the property's loan amount, the interest rate offered by your lender, and the repayment term, typically 15, 20, or 30 years. Like any amortizing loan, each mortgage payment includes both principal and interest, with the split shifting from mostly interest early on to mostly principal later in the term.
Mortgages are usually the largest, longest-term debt most people take on, which makes even small differences in interest rate or term length translate into large differences in total cost. A 1% difference in interest rate on a 25-year mortgage can mean tens of thousands in extra interest over the life of the loan.
Beyond principal and interest, real-world monthly housing costs often include property taxes, homeowner's insurance, and in some cases mortgage insurance or HOA fees, this calculator focuses on the core principal-and-interest payment, which is the largest and most variable component.
How to Use
- 1Enter the home loan amount (after any down payment).
- 2Enter the annual interest rate offered by your lender.
- 3Enter the loan term in years (commonly 15, 20, or 30 years).
- 4The calculator shows your estimated monthly payment, total interest, and total amount repaid.
Formula
M = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)P = loan amount, r = monthly interest rate, n = total number of payments
Example: PKR 10,000,000 home loan at 11% annual interest over 20 years
- P = 10,000,000, annual rate = 11% → monthly rate r = 0.11/12 ≈ 0.00917
- n = 20 × 12 = 240 months
- M = 10,000,000 × 0.00917 × (1.00917)^240 / ((1.00917)^240 − 1)
- M ≈ 103,200
Tips & Things to Know
- Choosing a 15-year term over a 30-year term roughly doubles the monthly payment but can cut total interest paid by more than half, run both scenarios before deciding.
- A larger down payment reduces the loan principal, which lowers both your monthly payment and your total lifetime interest cost.
- This calculator estimates principal and interest only, remember to budget separately for property taxes, insurance, and any HOA or maintenance fees when assessing true affordability.
- Making extra principal-only payments, even small ones, early in the mortgage term can meaningfully shorten the loan and reduce total interest, since it directly reduces the balance interest is calculated on.