How to Calculate My Mortgage in the United Kingdom
- 1). Determine the interest rate per month, the number of payments required on the loan and the amount of money borrowed. For example, a borrower takes out a loan for 125,000 pounds. The bank charges an interest rate of 12 percent annually. The 12 percent annual rate equals 1 percent interest per month. The bank allows the borrower to make 300 payments over the next 25 years.
- 2). Multiply the interest rate per month by the amount borrowed from the bank. In the example, 1 percent times 125,000 pounds equals 1,250 pounds.
- 3). Add 1 to the interest rate per month. In the example, 1 plus 0.01 equals 1.01.
- 4). Raise the sum in Step 3 to the power of the negative number of payments required by the lender. In the example, 1.01 raised to the power of -300 equals 0.050534487.
- 5). Subtract the number determined in Step 4 from 1. In the example, 1 minus 0.050534487 equals 0.949465513.
- 6). Divide the number from Step 2 by the number from Step 5. In the example, 1,250 pounds divided by 0.949465513 equals a monthly payment of 1,316.54 pounds.
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