Mortgage Protection Calculator United Kingdom

A mortgage is a debt that could outlive you, and mortgage protection makes sure it does not fall on your family. This calculator reports the cover a decreasing term life policy needs today, which is your outstanding balance, and shows the monthly repayment and the total you will repay over the remaining term.

What mortgage protection cover has to do

If you die before the mortgage is repaid, the policy clears the loan so your dependants keep the home without the monthly payment. The cover you need today is therefore what you still owe today, which is why the tool treats your outstanding balance as the cover needed. As you pay the mortgage down, the balance falls, and a decreasing term policy follows it down, which keeps premiums lower than level cover paying the same lump sum throughout.

How the calculator works

Enter the outstanding balance, your interest rate and the years left. The calculator reports the balance as the cover a mortgage protection policy needs to match, then uses the standard repayment mortgage formula to show the monthly cost and the total over the term: the balance times the monthly rate, divided by one minus one plus the monthly rate raised to the power of minus the number of months. Multiply the monthly figure by the number of months for the total repaid; the difference between that and the balance is the interest.

Reading the results

The cover needed is the life cover to aim for so the loan can be cleared in full. The monthly repayment is the ongoing cost of the debt on a capital and interest basis. The total to repay adds every payment together, and the donut chart splits it into the loan and the interest. You can change the interest rate to match your deal or to test what a higher rate at your next remortgage would do.

A worked example

You owe £200,000 on a repayment mortgage at 5% with 25 years left. The cover needed is £200,000. The monthly repayment is about £1,169, and over 300 months you will repay about £350,754, of which about £150,754 is interest.

On a repayment mortgage the balance falls slowly at first, because early payments are mostly interest, and faster later. A decreasing policy usually reduces its cover using an assumed interest rate set by the insurer, so compare that rate with your mortgage rate to make sure the cover keeps pace with the debt.

Decreasing cover versus a level lump sum

Mortgage protection is usually decreasing cover because a repayment mortgage falls to zero by the end of the term, so there is no need to pay for a large fixed payout you will never need. If your mortgage is interest-only, the balance does not fall, so level term cover for the full amount fits better. You might also prefer level cover if you want the policy to leave something for your family beyond clearing the loan. The balance you enter is the right starting point for either type.

Assumptions and limitations

This is a planning estimate, not a quote. It assumes a repayment mortgage with one interest rate for the rest of the term; in practice people move between fixed and variable deals, so the real monthly cost and total interest will vary. The cover needed equals the current balance, the right target for a decreasing policy, but a real policy’s payout depends on the insurer’s assumed rate and can differ slightly from the balance in a given year. The tool does not price the insurance, which depends on your age, health, term and whether you add critical illness cover, and it ignores early repayment charges, overpayments and offset arrangements. Get a personalised quote before you buy.

About This Mortgage Protection Calculator

Use this mortgage protection calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.