How the interest rate shapes the cost
Interest is charged monthly on the balance owed at one twelfth of the annual rate, which is why the first year carries the most interest.
Loans against property often run for many years, so even a small difference in the rate adds up. Enter the rate from each quote to compare the total interest side by side.
Lenders may calculate interest differently, so compare the figures here with your offer.
Worked example
Borrowing £50,000 at 9% over 10 years costs £633.38 a month and £26,005.46 in interest, 52.0% of the amount borrowed. £4,368.85 of that is paid in the first year.
Over 5 years the payment rises to £1,037.92 but the interest falls to £12,275.07. Over 15 years the payment drops to £507.13, but the interest rises to £41,283.99.
Fixed or variable rates
Some loans against property have a fixed rate, others a variable rate that can change. This calculator assumes the rate stays the same for the whole term, so if yours can rise, try a higher rate to see the effect.
Your property may be repossessed if you don't keep up repayments on a loan secured on it.
What this calculator assumes
The interest figures come from an amortisation schedule for the loan against property: equal monthly payments on one nominal rate, with each month's interest charged on the balance still owed at one twelfth of the annual rate. The first-year interest shown is the interest in the first twelve payments.
It leaves out processing and valuation fees and early repayment charges, so the total interest is an estimate to compare options with.
Inputs for the loan against property interest rate calculator
Amount to borrow
The amount you want to borrow against the property.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Loan against property interest rate calculator questions
How much interest will I pay on a loan against property?
Enter your details above. For example, £50,000 at 9% over 10 years costs £26,005.46 in interest.
Why is the first year's interest so high?
Interest is charged on what you owe, which is highest at the start. In the example, £4,368.85 is paid in the first year.
Does a shorter term save interest?
Yes. In the example, 5 years instead of 10 saves £13,730.39 of interest, though the payment is higher.
What's the difference between the interest rate and the APR?
The interest rate is what's charged on the balance. The APR also includes most compulsory fees, so it's better for comparing the overall cost of different loans.