1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully amortize a loan over its term. This is the standard calculation used by UK lenders including First Direct.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( P \) — Principal loan amount (GBP)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)
• \( M \) — Monthly payment amount (GBP)

Explanation: The formula accounts for both principal repayment and interest charges, with payments remaining constant throughout the loan term.

3. Importance of Mortgage Calculation

Details: Understanding your monthly payment helps with budgeting and ensures you borrow within your means. First Direct and other UK lenders use this calculation to determine affordability.

4. Using the Calculator

Tips: Enter the loan amount in GBP, annual interest rate as a percentage (e.g., 3.5 not 0.035), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include insurance and taxes?
A: No, this calculates only the principal and interest payment. UK mortgages may have additional costs like buildings insurance.

Q2: How does First Direct calculate affordability?
A: First Direct typically lends up to 4-4.5 times income, considering this payment plus other financial commitments.

Q3: What's the maximum term First Direct offers?
A: First Direct offers mortgage terms up to 40 years, though shorter terms mean less total interest paid.

Q4: Are there prepayment penalties?
A: First Direct mortgages typically allow overpayments up to 10% of the balance annually without penalty.

Q5: How accurate is this calculator?
A: This provides a close estimate, but actual First Direct offers may vary slightly based on specific product features.