Mortgage Comparison Calculator

What this calculator is, and when to reach for it

Put two mortgage offers side by side and you quickly discover there is no single number that decides between them. One has the lower payment. The other has the lower total interest. A third measure, the one that usually matters most, says something different again. This calculator shows all of them at once and deliberately refuses to name a winner, because which measure counts depends on facts about your life that no calculator knows.

The measure people overlook is cost over a horizon. Almost nobody keeps a mortgage for its full term, so comparing thirty-year totals answers a question you will never face. What you actually want to know is what each loan costs across the seven or ten years you realistically expect to hold it — and that requires counting not just the payments made, but the balance still owed at the end.

That last part is what separates a proper comparison from a superficial one. Two loans can extract the same cash from you over seven years while leaving you owing different amounts, and the one that leaves you owing less has genuinely cost you less. Money that went to your own balance is not an expense.

Reach for this page when you are choosing between offers, when one lender wants fees for a better rate, or whenever a comparison has been presented to you using a single figure and you suspect the figure was chosen carefully.

The four measures, and who each one suits

Monthly payment matters when cash flow is the constraint. If a payment would leave you uncomfortable in a difficult month, no long-run saving compensates. This is the measure to lead with when budgets are tight.

Total interest matters when you genuinely intend to keep the loan for its full life, which is rarer than people assume. It is the purest measure of the cost of borrowing, and the one most distorted by differences in term.

Cost over your horizon is the honest default for most people. It counts everything you pay plus everything you still owe, across a period you choose, and it cannot be gamed by stretching the term.

Time to payoff matters when being free of the debt by a particular date is the goal, such as retirement. A loan that finishes two years earlier can be worth a higher payment for reasons that have nothing to do with arithmetic.

Where to go next

If one of the loans is your current mortgage, the refinance calculator is the more direct tool, and the break-even calculator answers the timing question specifically.

Where fees differ between offers, total them properly with the closing costs calculator before comparing, and if one offer involves buying the rate down, test it with the points calculator. The rate you are quoted depends heavily on your position, so check that first with the loan to value calculator.

For the payment on any single loan including tax and insurance, use the mortgage calculator, and the amortization calculator shows how each option would actually unwind year by year.

How the comparison is worked out

Each loan is amortized independently, then measured four ways. The horizon calculation is the one worth understanding properly.

cost over horizon = (payment × months) + remaining balance − original principal + fees

payment

the scheduled payment on that loan

months

the horizon you expect to keep the loan

remaining balance

what would still be owed at the end of the horizon

fees

any up-front costs specific to that offer

Why the remaining balance belongs in the calculation

If you only compared payments made over seven years, a loan that barely touches its principal would look identical to one that repays aggressively. Including what is still owed corrects that, because the balance is a liability you carry forward, not a cost you have escaped.

Subtracting the original principal turns the result into a true cost: what the borrowing consumed, rather than the gross cash that moved. Two loans that both leave you owing nothing and both cost 150,000 have cost the same regardless of how the payments were arranged.

Why a lower payment can be the worse loan

A payment falls for two quite different reasons: a better rate, which genuinely reduces cost, or a longer term, which merely spreads it. The monthly figure cannot tell you which is happening, and offers are sometimes presented in a way that relies on that ambiguity.

Compare loans of the same term wherever possible. Where the terms differ, the horizon measure handles it correctly, because a loan that repays less principal will show a larger remaining balance and lose the advantage its payment appeared to give it.

Fees belong to the offer that carries them

A lower rate bought with an arrangement fee is not a lower rate until the fee is accounted for. Fees are counted once, at the start, against the loan that requires them, which is why an apparently better rate can lose over a short horizon and win over a long one.

The crossover point is worth locating explicitly. Two offers frequently swap places somewhere between year three and year six, and knowing where that happens turns the decision into a simple question about how long you expect to stay.

What the calculator will not decide for you

It shows each measure separately and stops there. That is deliberate: naming a winner would require assuming which measure matters to you, and the honest answer depends on how secure your income is, how long you expect to stay, and how much a lower payment is worth in peace of mind.

When the measures disagree, that disagreement is the finding. A loan that wins on payment and loses on total cost is offering you liquidity in exchange for money, and whether that is a good trade is a judgement rather than a calculation.

What this page assumes

The calculator builds a fixed-rate repayment schedule for each scenario and compares scheduled payments, interest, payoff term, and selected-horizon cash flow.

It excludes taxes, fees, lender decisions, country-specific rules, irregular payments, cash-out, and live rates.

Worked examples, step by step

Compare two offers on a 350,000 loan over thirty years. Loan A is 6.5% with no fees. Loan B is 6.0% but carries 5,000 in arrangement costs.

The same two loans on four measures

Loan B wins on every measure here, but the last row is the one that decides it. The 5,000 fee takes 43.9 months to recover at 113.81 a month, so B only becomes the better loan after roughly three years and eight months.

A buyer confident of staying seven years finishes 7,279 ahead. A buyer who moves after three years has paid 5,000 for a saving of about 4,100 and is slightly behind. Identical offers, opposite answers, decided entirely by a fact about the borrower rather than the loan.

Reading the horizon figure correctly

The seven-year cost of Loan A is 152,284.86. That is not what you hand over: you pay 185,828.00 in that period. The difference is the principal you repaid, which came back to you as equity rather than disappearing.

Loan B costs 145,005.71 over the same period despite the 5,000 fee, because the lower rate both reduces interest and leaves a smaller balance outstanding — 313,737.85 against A’s 316,456.86. The gap in remaining balance is a real part of the advantage and is invisible if you compare payments alone.

The vocabulary, on and around this page

Horizon

The period you realistically expect to keep the loan. It is the fairest basis for comparing offers, since few mortgages run their full term.

Cost over horizon

Payments made plus the balance still owed at the end, less the original principal, plus fees. It measures what the borrowing genuinely consumed.

Remaining balance

What would still be owed at the end of a horizon. Including it prevents a slow-repaying loan from appearing artificially cheap.

Total interest

All interest across the full life of a loan. The purest measure of borrowing cost, and the one most distorted by term differences.

Fee recovery point

How long a cheaper but fee-bearing loan takes to overtake a fee-free alternative. Before it the fee-free loan is ahead.

Crossover

The moment two offers swap places on a given measure. Locating it turns the choice into a question about how long you will stay.

Arrangement fee

A charge for setting up a loan, often accompanying a lower rate. It belongs to the offer that carries it and is counted once, up front.

Note rate

The rate the payment is built from, as opposed to the APR which folds certain fees into one comparison figure.

APR

A single number combining rate and certain costs so offers can be ranked. Useful for shortlisting, not for computing payments.

Term

The length of the loan. Differences in term make payment comparisons misleading and are handled correctly by the horizon measure.

Amortization

The schedule by which each payment splits between interest and principal. Each loan is amortized separately before being compared.

Equity build

How quickly a loan converts payments into ownership. Two loans with equal payments can build equity at different speeds.

Discount points

An optional up-front payment to lower the rate. It functions as a fee in this comparison and has its own recovery period.

Payment shock

The strain of a payment larger than you are used to. It is a reason to weight the monthly measure more heavily than the arithmetic suggests.

Time to payoff

How long until the balance reaches zero. It matters when clearing the debt by a particular date is itself the objective.

Like-for-like comparison

Comparing loans on the same term and the same basis. Without it, differences in structure masquerade as differences in price.

Opportunity cost

What money spent on fees could have earned elsewhere. It slightly favours the fee-free option and is not modelled here.

Principal repaid

The portion of payments that reduced the balance. It is not a cost, which is why gross payments overstate what a loan takes from you.

Fixed rate

A rate held for the term, which is what makes a full projected comparison meaningful. Variable loans cannot be compared this way beyond their fixed period.

Scenario

One complete set of loan assumptions. Changing a single input creates a new scenario and can reverse which option leads.

Common mistakes, and what this page will not do

• Choosing on the monthly payment alone. A lower payment can come from a longer term rather than a better rate. The payment cannot tell you which, and offers are sometimes framed to exploit that.
• Comparing full-term totals you will never reach. Most mortgages end long before their term. Thirty-year totals answer a question few borrowers actually face.
• Ignoring the balance left at the end of the horizon. A loan that repays little principal looks cheap on payments alone. What you still owe is a liability carried forward, not a cost avoided.
• Leaving fees out of the offer that carries them. A lower rate bought with an arrangement fee is not cheaper until the fee is recovered, which took nearly four years in the example above.
• Comparing loans with different terms directly. Differences in term distort every measure except cost over a horizon. Compare like with like wherever the option exists.
• Mixing a note rate with an APR. They measure different things, so the offer with more fees can appear to be the cheaper one if the two are set side by side.
• Assuming one loan must win everything. When measures disagree, that is the finding. A loan winning on payment and losing on cost is selling you liquidity.
• Using an optimistic horizon. People overestimate how long they will stay. A shorter, more honest horizon usually favours the option with lower up-front cost.
• Comparing a fixed rate against a variable one as though both were certain. A projection past a variable loan’s fixed period is an illustration. The comparison stops being like-for-like at that point.

What this calculator leaves out: This calculator does not include property tax, insurance, or association charges, model variable rate movements, account for tax treatment of interest, include the opportunity cost of fees paid, or recommend an option. It amortizes the scenarios you enter and reports each measure separately.

Frequently asked questions