Compare two mortgages on a like-for-like basis over the fixed period.
Lender quotes usually show the headline monthly payment. When a product fee is added to the loan, that fee is spread over the full mortgage term, often 25 to 30 years. The resulting monthly increase can look small, even though the quoted rate may apply for only two to five years.
This can make a low-rate, high-fee mortgage look better than it is. For example, a £2,000 fee spread over a 25-year term has little effect on the headline payment, but the fee still has to be paid for a deal that may last only two years, and again for every subsequent two years.
The effective monthly payment adjusts for this by making both mortgages reach the same balance at the end of the fix. Because the final balances match, the figures provide a direct comparison of what each deal costs over the period being assessed. The product fee is therefore reflected over the fixed period rather than being diluted across the full mortgage term.
The lender collects the headline payment, not the effective payment shown here. If the effective amount is higher and you pay only the lender's required amount, the mortgage will finish the fixed period with a higher balance. The deal may still be cheaper overall, but part of the saving remains as cash rather than as additional equity.
1. Overpay by the difference. You can pay the effective amount each month, with the difference reducing the capital balance. This makes the comparison shown by the calculator easier to realise in practice. Check the lender's overpayment allowance and any early repayment charges before doing so.
2. Keep the extra cashflow. You can pay the headline amount and retain the monthly difference. At the end of the fix, that money can be used to reduce the mortgage before remortgaging, kept as savings, or used elsewhere. If it is not paid towards the mortgage, the balance and future repayments will be slightly higher.
This calculator is designed to compare two mortgage products during their fixed periods. It does not provide a full amortisation schedule, an annual breakdown of interest and capital, or projections for the lender's standard variable rate after the fix ends.
It also excludes regular overpayments, early repayment charges, cashback, offset arrangements, and other product-specific conditions. These may affect the final choice, particularly when two deals have similar effective costs. Consider them separately and check the lender's terms before making a decision.
Headline monthly payment: the standard payment where the fee is added to the loan and amortised over the full mortgage term. This is typically the figure the lender quotes you.
Effective monthly payment: the payment that makes both mortgages end the fix at exactly the same balance, so cost over the fix is a direct like-for-like comparison.
Cost over fix: the effective monthly payment × number of months in the fix — the like-for-like cost of each deal during the fixed period.