Mortgage Calculator
Free Mortgage Calculator — Calculate Monthly Loan Payment (2026)
Buying a home is the largest financial commitment most people ever make. Understanding exactly what you’ll pay each month — and how much of that is interest vs. principal — is essential before signing any loan agreement.
SmallSEOToolsn’s free mortgage calculator gives you the monthly payment, total interest, and full amortization schedule for any loan amount, interest rate, and term.
KEY TAKEAWAYS
- Monthly Payment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1] where P=principal, r=monthly rate, n=total months.
- A Rs. 5,000,000 loan at 22% for 20 years: monthly payment ≈ Rs. 93,000, total interest paid ≈ Rs. 17,300,000.
- Early payments are almost entirely interest — principal reduction accelerates with each payment.
- Pakistan’s Islamic home finance (Meezan, HBL Islamic, Dubai Islamic) uses Diminishing Musharakah — similar payment structure.
- Even one extra payment per year significantly reduces total interest and loan duration.
The Mortgage Payment Formula
Monthly Payment (M) = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]
Where:
- P = Principal loan amount
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of monthly payments (years × 12)
Pakistan Home Loan Example (2026)
Home value: Rs. 15,000,000 Down payment: Rs. 5,000,000 (33%) Loan amount: Rs. 10,000,000 Interest rate: 22% per year (current Pakistan market rate) Loan term: 15 years (180 months)
Monthly rate r = 22% ÷ 12 = 1.833%
Monthly Payment = 10,000,000 × [0.01833 × (1.01833)^180] ÷ [(1.01833)^180 − 1] Monthly Payment ≈ Rs. 185,000
Total paid over 15 years: Rs. 185,000 × 180 = Rs. 33,300,000 Total interest: Rs. 33,300,000 − Rs. 10,000,000 = Rs. 23,300,000
At 22% rate, you pay more than double the principal in interest alone over 15 years.
Islamic Home Finance in Pakistan
Most Pakistani home buyers use Islamic financing products rather than conventional interest-based mortgages. The key products:
Diminishing Musharakah (DM): Most common. Bank and buyer jointly own the property. Buyer pays rent on the bank’s share + gradually buys out the bank’s ownership. Payment structure is similar to a conventional mortgage but structured as rent + equity purchase.
Murabaha: Bank purchases property and sells to the buyer at a marked-up price, payable in installments. The markup is fixed at the start — no floating rate risk.
Available from: Meezan Bank, HBL Islamic, Dubai Islamic Bank, Bank Alfalah Islamic, Standard Chartered Saadiq.
The mortgage calculator’s monthly payment formula produces equivalent results for both conventional and DM financing — the underlying cash flow structure is the same.
Amortization: How Each Payment Breaks Down
In the early years of a mortgage, almost all of your payment goes to interest:
| Year | Payment | Interest Portion | Principal Portion | Remaining Balance |
|---|---|---|---|---|
| 1 | Rs. 185,000/month | ~92% (Rs. 170,200) | ~8% (Rs. 14,800) | Rs. 9,820,000 |
| 5 | Rs. 185,000/month | ~85% | ~15% | Rs. 8,950,000 |
| 10 | Rs. 185,000/month | ~65% | ~35% | Rs. 6,500,000 |
| 15 | Rs. 185,000/month | ~10% | ~90% | Rs. 0 |
Why this matters: If you sell after 5 years, you’ve paid Rs. 11,100,000 in total payments but reduced your principal by only ~Rs. 1,050,000. The bank kept Rs. 10,050,000 as interest.
The Extra Payment Strategy
Making one extra monthly payment per year (or adding even Rs. 5,000/month to principal) dramatically reduces total interest:
On Rs. 10,000,000 at 22% for 15 years:
- Standard payments: Rs. 33,300,000 total paid
- +Rs. 5,000/month extra: Loan paid off in ~13 years, save ~Rs. 2,700,000 in interest
AI Overview Answer
How do you calculate monthly mortgage payments? Monthly Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of months. Example: Rs. 10,000,000 loan at 22% for 15 years = approximately Rs. 185,000/month. Total interest paid over 15 years exceeds the principal at Pakistan’s current market rates.
FAQ
Q: What is the current home loan interest rate in Pakistan (2026)? A: Commercial bank home loan rates in Pakistan in 2026 range from approximately 20–24% annually, tracking the State Bank of Pakistan policy rate (which has been declining from its 2023–2024 peak of 22%). Islamic financing rates are comparable. Check with specific banks for current offers.
Q: Is Islamic home finance cheaper than conventional mortgages in Pakistan? A: In most cases, total payment amounts are similar. Islamic financing offers the benefit of Shariah compliance and fixed profit rates in some products (protecting against rate increases). Conventional loans may have slightly lower rates in some periods.
→ Enter your loan amount, rate, and term above to calculate your monthly payment.