Mortgages
Installment comparison: borrow less or repay sooner
Set your starting scenario and how far you want to step capital and term down: the table shows the instalment for every combination, so you can see at a glance which one fits your budget.
Why compare instalments side by side
When the instalment on the mortgage you had in mind comes out too high, there are essentially two levers: borrow less — that is, put down a larger deposit — or spread repayment over a different number of instalments. The trouble is that the two act very differently, and weighing them one at a time easily leads to the wrong conclusion.
Reducing the capital lowers the instalment proportionally: at the same term and rate, borrowing 10% less means an instalment exactly 10% lower. Lengthening the term also lowers the instalment, but markedly increases total interest, and lenders cap the term anyway — often by the borrower's age at the final payment. This table crosses both dimensions at once, so you can see which combinations stay under the instalment you can afford.
Example: on €150,000 at 3.5% over 240 monthly instalments the instalment is about €869.94. Bringing the capital down to €130,000 lowers it to roughly €753.95; keeping the €150,000 but dropping to 180 instalments raises it to about €1,072.32. The highlighted cells are those that stay equal to or below the starting instalment.
The same comparison helps when weighing a remortgage or a lump-sum overpayment: instead of the initial capital, enter the outstanding balance of your current loan, and instead of the original term, the instalments you have left. The table then shows what you would pay on a shortened plan or after paying down capital — which is also the answer to whether an overpayment should shorten the term or cut the instalment.
Common mistakes
- Looking only at the instalment: a longer term lowers it but raises the total interest paid over the whole mortgage. Use the amortization schedule to see that overall cost.
- Forgetting that how much you can borrow depends on the property's value: lenders finance up to a maximum loan-to-value ratio — commonly around 80%, though the limit and the rules behind it differ by country — so you need the balance as a deposit, plus the purchase costs.
- Assuming the rate stays the same as the term changes: lenders price different terms differently, and the rate usually improves at lower loan-to-value ratios. Compare real quotes rather than a single assumed rate.
Frequently asked questions
What is the installment comparison?
A two-way comparison: a table showing the instalment for every combination of capital borrowed and number of instalments, starting from your scenario and stepping both quantities down by the increment you set.
Why does the instalment rise when the term shortens?
Because the same capital, plus interest, is spread over fewer payments: each instalment has to carry a larger share of principal. In exchange, the total interest paid falls, because the debt is outstanding for less time.
Does the instalment fall proportionally with the capital?
Yes: at the same rate, term and frequency, the instalment is directly proportional to the capital financed. Borrowing 20% less produces an instalment exactly 20% lower. The same does not hold for the term, whose effect is not linear.
After an overpayment, should I shorten the term or cut the instalment?
Shortening the term saves more interest, because the debt stops accruing sooner; cutting the instalment eases the monthly budget. This table shows both effects at once: the columns give the saving from a shorter term, the rows the saving from a smaller outstanding balance.
How this calculation works
Every cell applies the constant-instalment formula R = C × i / (1 − (1 + i)^−n), where C is the row's capital, n the column's number of instalments and i the interest rate per period, obtained by dividing the annual rate by the number of periods per year (12 for monthly, 4 for quarterly, 3 for four-monthly, 1 for annual). Rows apply C − ΔC × row, columns n − Δn × column, stopping when the value reaches zero.