What a mortgage payment includes
A basic repayment mortgage payment has two moving parts: principal and interest. Principal is the amount borrowed. Interest is the cost of borrowing that money. Early in the mortgage, a larger share of each payment goes to interest. Later, more of the payment reduces the balance.
Why rate and term matter
The interest rate changes the cost of every borrowed pound. The term changes how many months the loan is spread across. A longer term can make the monthly payment lower, but it usually raises total interest because the loan lasts longer.
How to compare scenarios
Compare the monthly payment, total interest and loan-to-value together. A scenario with a comfortable monthly payment can still be expensive if the term is stretched too far. A scenario with a lower loan-to-value may unlock better rates if the lender prices by equity bands.
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Estimate monthly mortgage payments, total interest and loan-to-value from property price, deposit, rate and term.
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