The answer: £1,056 per month
On a £200,000 repayment mortgage at 4% interest over 25 years, your monthly payment will be £1,056.
Over the full 25-year term, you'll pay:
- Total repayment: £316,800
- Total interest: £116,800
- Interest as % of loan: 58.4%
This means you'll pay back nearly 1.6 times the amount you borrowed due to interest charges over the 25-year period.
How the repayments break down
In the early years of your mortgage, most of your monthly payment goes towards interest rather than reducing the capital:
- Year 1: Approximately £667 interest, £389 capital per month
- Year 13: Approximately £500 interest, £556 capital per month
- Year 25: Approximately £35 interest, £1,021 capital per month
This is why making overpayments in the early years can save you so much money - you're reducing the capital faster, which means less interest charged over time.
How different interest rates affect your payments
Interest rates make a huge difference to your monthly costs. Here's how the same £200,000 mortgage over 25 years would vary:
- 3.5%: £1,001 per month (total interest: £100,300)
- 4.0%: £1,056 per month (total interest: £116,800)
- 4.5%: £1,112 per month (total interest: £133,600)
- 5.0%: £1,169 per month (total interest: £150,700)
Just a 1% increase in interest rate costs you an extra £113 per month or £33,900 over the full term!
Should you choose a shorter term?
Reducing your mortgage term can save you tens of thousands in interest. Here's the same £200,000 mortgage at 4% with different terms:
- 20 years: £1,212 per month (total interest: £90,880)
- 25 years: £1,056 per month (total interest: £116,800)
- 30 years: £955 per month (total interest: £143,800)
By choosing a 20-year term instead of 25, you'd pay an extra £156 per month but save £25,920 in interest overall. It's worth considering if you can afford the higher monthly payments.
The impact of overpayments
Making regular overpayments can dramatically reduce both your term and interest costs. For example, overpaying just £100 per month on your £200,000 mortgage would:
- Reduce your term by 4 years and 3 months
- Save you £25,400 in interest
- Mean you're mortgage-free at year 20 instead of year 25
Most lenders allow you to overpay up to 10% of your outstanding balance each year without penalties, so it's worth checking your mortgage terms.