Borrowing a six-figure sum over twenty or thirty years is often the single biggest financial decision a person makes — and the math behind it is surprisingly obscured. Monthly payments are always displayed prominently; the total interest paid over the life of the loan is usually not. A 0.5 percentage-point difference in rate that looks small on a monthly line can add tens of thousands of euros across a 30-year term. This calculator gives you the monthly payment, the complete amortization schedule, and the effect of making extra payments, so the full cost of a loan is transparent before you sign anything.

How monthly payments are calculated

Most modern loans use an annuity structure: a fixed monthly payment that covers both interest and principal. The payment itself stays constant, but the split between interest and principal shifts gradually — early payments are mostly interest, later payments are mostly principal.

The standard annuity formula:

M = P × [ i(1 + i)ⁿ ] / [ (1 + i)ⁿ − 1 ]

Where:

M is the monthly payment
P is the loan principal (amount borrowed)
i is the monthly interest rate (annual rate / 12)
n is the total number of monthly payments (years × 12)

At rates near zero, this reduces to P / n (straight division across the term). At high rates, interest dominates: a 20-year loan at 10% costs nearly twice the principal in total.

Interest calculation methods

Different banks compute the monthly interest on a loan slightly differently, and the differences compound over a long term.

Standard (monthly, 12 equal periods)

Interest is calculated once per month at annual rate / 12. This is the model used by most personal loans and retail mortgages in continental Europe. Math is simple; results are predictable.

Actual/360 (French method)

Monthly interest uses the actual number of days in the month but divides by a 360-day year. February has ~28/360 of a year’s interest; July has 31/360. Common in commercial lending and in some European mortgages. Over 30 years, Actual/360 costs a borrower about 1.5% more total interest than the straight 12-equal-periods method for the same nominal rate — because on average, days / 360 > 1/12.

Actual/365 (English method)

Identical idea, but using a 365-day year. Most mathematically neutral across a calendar year (total interest equals nominal rate × principal for a full year with constant balance). Common in the UK and some US mortgages.

The calculator supports all three methods. If you’re comparing quotes from different banks, always confirm which method they use — the same nominal rate produces different actual costs.

Amortization: the interest-then-principal pattern

In the early years of a long-term mortgage, the majority of every monthly payment goes to interest, not to paying down the loan. As the principal balance shrinks, the interest portion shrinks with it, and the principal portion grows.

Example: €200,000 at 4.5% over 30 years.

Monthly payment ≈ €1,013
First payment: €750 interest, €263 principal
Payment #60 (year 5): €691 interest, €322 principal
Payment #120 (year 10): €619 interest, €394 principal
Payment #180 (year 15): €515 interest, €498 principal — roughly the crossover point
Payment #360 (final): €4 interest, €1,009 principal

This means that if you sell the house after seven years, most of what you “paid toward the house” went to the bank as interest. The full amortization schedule generated by the calculator shows this pattern month by month.

The accelerated payoff effect

Extra principal payments early in the loan have an outsized effect on total interest, because you’re removing the balance that would have accumulated the most interest over the longest time.

Same €200,000 at 4.5% over 30 years, with an extra €100/month toward principal:

Without extra payments: 30 years, €164,813 total interest
With €100/month extra: paid off in ~25 years, €130,568 total interest
Savings: ~€34,000 in interest, 5 fewer years of payments

The extra €100/month (€36,000 total over 25 years) saves you €34,000 in interest — effectively a 94% return on the extra contributions, guaranteed. Higher-rate loans produce even larger effects.

The calculator’s “extra payment” mode models exactly this: enter a monthly extra amount or a one-off lump sum and see the updated term and interest total.

Factors that drive total cost

Interest rate. A rate cut from 5.0% to 4.5% on a 30-year €200,000 mortgage saves about €20,000. Always shop rates.
Loan term. A 15-year term has a higher monthly payment than a 30-year at the same rate, but total interest is drastically lower. €200,000 at 4.5%: 30y costs €164,813 interest; 15y costs €75,390 — a €90,000 difference.
Down payment. A larger down payment reduces the principal (and often qualifies you for a better rate and removes mortgage insurance).
Points / fees. Paying upfront to “buy down” the rate is worthwhile only if you’ll hold the loan long enough to break even. Compute the break-even month as points paid / monthly savings.
Prepayment penalties. Some loans charge a fee for early payoff. Always check the loan agreement before making large extra payments.

How to use this tool

Loan amount — the principal you plan to borrow.
Interest rate — the annual rate you’ve been quoted. For variable-rate loans, enter the current effective rate (base rate + margin).
Term — in years.
Interest method — standard, Actual/360, or Actual/365.
Optional: extra payments — model a monthly extra or a one-off lump sum.
Review the monthly payment, total interest, and the month-by-month amortization schedule.

Frequently asked questions

Why is the total interest so high compared to the principal?

Because time compounds the cost. Over 30 years at 4.5%, a borrower pays back roughly 1.8× the principal in total (principal + interest). The longer the term and the higher the rate, the larger this multiplier. Shortening the term or making extra payments both shrink it.

Should I pick a 15-year or a 30-year mortgage?

The 15-year is cheaper in total but requires a monthly payment roughly 40–50% higher. A common compromise: take the 30-year for payment flexibility, but voluntarily pay what a 15-year would cost. You get the interest savings without locking yourself into the higher mandatory payment during lean months.

Is it better to pay down the mortgage or invest the extra money?

This is a complete analysis on its own. Short version: if your after-tax mortgage rate is higher than your realistic after-tax investment return, pay down; otherwise invest — but only if you have the discipline to actually invest. See the Mortgage Buyout vs Investing calculator for a full side-by-side model.

What’s APR and is it the same as interest rate?

APR (Annual Percentage Rate) includes the nominal interest rate plus certain upfront fees (origination, points, some mortgage insurance), spread over the loan term. APR is usually slightly higher than the stated rate and is a better apples-to-apples comparison between loan offers.

Why do my lender’s numbers differ from this calculator’s by a few cents?

Rounding and day-count conventions. The underlying formula is the same, but banks round per-line or per-payment, apply leap-year adjustments, and use their chosen interest-calculation method (Actual/360, Actual/365, or standard). Differences of a few cents per payment compound to a few euros over a year — not a bug, just a convention difference. For the authoritative figure, use your lender’s amortization schedule.

What happens if the rate changes (variable-rate mortgage)?

The calculator models a fixed rate. For a variable-rate loan, the base rate (EURIBOR, SOFR, or similar) changes periodically and the monthly payment is recalculated each reset. To stress-test a variable mortgage, re-run the calculator with your current rate, then with a “what if +2 percentage points” rate, to see the payment sensitivity.

Privacy note

All calculations run in your browser. No loan details, amounts, or schedules leave your device.

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