Mortgage vs Personal Loan Calculator
Cheaper way to fund a large expense.
Compare cost of funding via mortgage top-up vs personal loan for the same amount. Enter amount needed and mortgage rate to see total interest of each.
What this tool does
This calculator models the total interest cost of funding a large expense through either a mortgage or personal loan. It compares two borrowing routes by calculating the full interest payable under each option, given your loan amount, the rates available to you, and the repayment terms. The result shows how much more or less interest you'd pay by choosing one path over the other. Mortgage rates typically sit lower than personal loan rates, but the mortgage term often extends longer. Personal loans charge higher rates but compress repayment into fewer years. The interest difference—driven mainly by the rate gap and term length—illustrates the trade-off between lower monthly payments and total interest paid. This calculation assumes standard amortisation and fixed rates; it does not account for fees, insurance, early repayment penalties, or changes in circumstances.
Enter Values
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Formula Used
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Calculations or display — let us know.
Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
20,000 at 5% mortgage top-up over 15 years: 8,500 interest. Same 20,000 at 9% personal loan over 5 years: 4,900 interest. Personal loan wins total interest despite upper rate — shorter term dominates. Mortgage top-up has lower monthly payment but much higher total cost.
Quick example
With amount needed of 20,000 and mortgage rate of 5% (plus mortgage remaining term of 15 and personal loan rate of 9%), the result is 3,558.54. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.
Which inputs matter most
You enter Amount Needed, Mortgage Rate, Mortgage Remaining Term, Personal Loan Rate, and Personal Loan Term. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the option with the lower calculated total changes.
What's happening under the hood
Standard amortisation for each path. Subtract to find interest difference. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.
What the headline rate hides
Lenders quote a rate; what you pay is a blend of that rate, fees, insurance, and any early-repayment penalty built into the product. The figure here isolates the core interest cost so you can compare like-for-like across deals — then add the other costs separately before signing anything.
What this doesn't capture
The figure excludes arrangement fees, valuation costs, legal fees, insurance, and any early-repayment charges — those can add several thousand to the headline cost. Rate changes at renewal for fixed-term deals will shift the picture further. Use this for the core interest/principal math and add the other costs on top.
Borrowing £20,000 at 5% mortgage versus 9% personal loan rates results in 3,558.54.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
This calculator computes the total interest payable under each borrowing option using standard amortisation principles. For both the mortgage and personal loan, it calculates the monthly payment amount based on the loan amount, interest rate, and term length. It then multiplies the monthly payment by the total number of months to determine total repayment, and subtracts the original loan amount to isolate interest paid. The difference between the two interest totals shows the relative cost of each option. The model assumes a fixed interest rate throughout the full term, regular monthly payments, and no early repayment, fees, or changes to circumstances. It does not account for variations in actual rates, payment holidays, or differences in tax treatment between borrowing types.
References
Frequently Asked Questions
Why does mortgage cost more total?
Why does mortgage have lower monthly?
Risk of mortgage top-up?
Best use case for mortgage top-up?
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