To calculate mortgage repayment interest, use the amortization formula: M = P[r(1+r)^n]/[(1+r)^n -1], where M is the monthly payment, P is the principal loan amount, r is the monthly interest rate, and n is the total number of payments. This formula accounts for both principal and interest, with interest decreasing over time as the principal is paid down.

The amortization formula is standard for fixed-rate mortgages because it ensures equal monthly payments while systematically reducing the outstanding balance. In the U.S., 90% of mortgages are fixed-rate loans, according to the Federal Housing Finance Agency (FHFA). For example, a $300,000 loan at a 7% annual interest rate (0.5833% monthly) over 30 years (360 payments) results in a monthly payment of $1,799.08. Over the loan term, approximately $287,000 of the $300,000 principal is repaid, while $87,000 goes to interest, per calculations using the FHFA’s 2023 average mortgage rates. This structure aligns with consumer preferences for predictable payments, as noted in a 2022 U.S. Census Bureau survey showing 85% of borrowers prioritize fixed-rate mortgages for budgeting stability. The formula’s mathematical rigor ensures transparency, allowing borrowers to estimate total interest costs upfront, which is critical given the average U.S. mortgage size of $447,200 (Q3 2023, U.S. Bureau of Economic Analysis).