Home Financing Calculator
Compare a repayment mortgage against reducing/constant principal repayment for your home loan, and estimate the total upfront cost (deposit, Stamp Duty, legal fees) in British Pounds.
Purchase Details
Stamp Duty Land Tax is charged in bands, not a flat percentage — this slider is an effective rate for your total purchase. Use HMRC's stamp duty calculator to confirm your exact amount (first-time buyers and second homes have different rules).
Typically £800–£2,000 in total for an average purchase — get a fixed quote from your conveyancing solicitor before budgeting.
Repayment Mortgage vs. Reducing Principal Repayment
Repayment Mortgage
Reducing/Constant Principal Repayment
💬 In Simple Words
With reducing principal repayment you'd pay £32,305 less total interest than with a repayment mortgage — but your first installment would be £421.80 higher than the repayment mortgage.
Total Upfront Cost
Educational estimate. Stamp Duty Land Tax is banded, not flat — verify your exact amount with HMRC's calculator before budgeting your purchase. Does not include insurance, surveys, or mortgage arrangement fees.
Repayment Mortgage vs. Reducing Principal Repayment: Which to Choose?
👋 Simple Explanation
With a repayment mortgage you always pay the same amount each month — easier to budget, but you pay more interest overall. With reducing principal repayment you pay more at the start and less at the end — harder initially, but you end up paying less interest. If you can handle the higher initial installment, reducing principal repayment generally works out cheaper in total. Most home loans in the United Kingdom are offered with a repayment mortgage; ask your lender directly if a reducing-installment option is available.
Repayment Mortgage: monthly payment = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1] (constant)
Reducing Principal: Principal Portion = P / n (constant); Installment = Principal Portion + Balance × r (decreasing)
Costs of Buying a Home in the United Kingdom
Beyond the deposit, buying a home in the United Kingdom involves additional costs: Stamp Duty Land Tax (charged in bands, with relief for first-time buyers up to £300,000 and a 5% surcharge on second homes), conveyancing solicitor fees, and often survey and mortgage arrangement fees. Add all of these up before deciding how much you need to save for closing — it's not just the down payment.
Frequently Asked Questions
- What's the difference between a repayment mortgage and reducing/constant principal repayment?
- With a repayment mortgage (the standard structure for home loans in the United Kingdom), your monthly payment stays the same for the entire loan term — early on you pay more interest and less principal, and that ratio flips over time. With constant principal repayment, you pay down the same amount of principal each month, so the installment starts higher and decreases — the total interest paid is usually lower than with a repayment mortgage for the same loan. Most home loans in the United Kingdom use the repayment mortgage structure; a reducing-installment option is less common but can be requested or negotiated with some lenders.
- What is stamp duty in the United Kingdom?
- Stamp Duty Land Tax (SDLT) is a tax paid when you buy a property in England or Northern Ireland (Scotland and Wales have their own equivalents, LBTT and LTT). It's charged in bands rather than a flat percentage: nothing on the portion up to £125,000, then rising rates (2%, 5%, 10%, 12%) on each portion above that. First-time buyers pay nothing up to £300,000 and 5% on the portion from £300,000 to £500,000. A second home or buy-to-let adds a 5% surcharge on top of the standard rates. Confirm the exact amount for your situation with HMRC's stamp duty calculator or a conveyancing solicitor before budgeting your purchase.
- What other costs should I consider besides stamp duty when buying a home in the United Kingdom?
- Besides Stamp Duty Land Tax, you'll typically pay conveyancing solicitor fees (legal work plus disbursements like local authority searches and Land Registry fees), a mortgage arrangement/product fee charged by the lender, and a survey or valuation fee. These costs vary by lender, location, and property value — get a detailed quote before completing your purchase.