For a mortgage calculator uk, covering buy to let mortgages as well as domestic mortgages, the website will need to have the APR and AER interest rates factored in for the repayment full term of the mortgage, as well as the compounded balance that is outstanding at the end of each of the year’s, along with the ability to add on that particular years’ interest, whilst also the capability (where necessary) to show any repayments made.

The mortgage calculator should not simply look at the principal balance of the mortgage, i.e. £100,000, then x5% for x25 years.  This figure is too simplied and does not allow for the interest to capitalise at the end of each of the subsequent years.

This is shown below for the mortgage calculator uk over the first year. 

Mortgage calculator UK

£100k x 5% = £105,000 – therefore the balance at the end of year 1 if not repayments are made is £105,000 and not the initial sum, in theory.  Although since most loans and mortgages are front loaded, the mortgage balance that may be showing on the statement, will be for the full term of the mortgage loan, and not the first year that we are showing here on the calculation, not the overall balance.

Year 2 and the mortgage calculator uk start figure would therefore be £105,000 x5% = £110,250 and so forth.  When calculating loans and mortgages, this needs to be taken into account, so that the cumulative balance is used and not the simple x25 years sum that most people would consider doing, since that is not the correct balance at the end of each year.

If mortgage repayments are factored into the mortgage agreement, then the amount being repaid for that period could in theory be minused off, although I cannot confirm this is the case.

In this scenario, the £105,000 at the end of the first year, would then have £200 x 12 (if the monthly repayment was £100), so that is £2400 to be taken away – £102,600 would then be the sum outstanding if using a mortgage calculator uk.