Loan Repayment vs Mortgage Calculator: Key Differences Explained
Compare personal loans and mortgages to understand which calculation method applies to your situation.
Personal Loan vs Credit Card vs Mortgage: Understanding Your Borrowing Options
Borrowing money always has a cost. But the type of product, the APR, and the term can make a dramatic difference to the total amount you repay. This guide compares the three most common borrowing products for UK consumers in 2025 and shows you how to calculate the true cost of each.
APR Comparison: Typical Rates in 2025
| Product | Typical APR | Typical Term | Best For |
|---|---|---|---|
| Personal Loan | 6–16% | 1–7 years | Fixed-cost planned purchases |
| 0% Purchase Credit Card | 0% for 12–24 months | Up to 2 years | Short-term interest-free spending |
| Standard Credit Card | 22–30% | Revolving | Short-term borrowing, paid in full |
| Residential Mortgage | 4.0–5.5% | 25–35 years | Property purchase |
Total Cost of Borrowing £10,000
| Product | APR | Term | Monthly Payment | Total Repaid | Total Interest |
|---|---|---|---|---|---|
| Personal Loan | 8% | 3 years | £313 | £11,268 | £1,268 |
| 0% Credit Card | 0% | 18 months | £556 | £10,000 | £0 |
| Standard Credit Card | 25% | 3 years | £398 | £14,328 | £4,328 |
When to Use Each Product
A personal loan is best when you need a fixed sum, want certainty on monthly payments, and have a clear repayment plan. A 0% credit card wins for purchases you can repay within the promotional window — just be disciplined, as the revert rate is usually 20%+. A mortgage is for property only — never use one for short-term borrowing. Avoid revolving credit card debt at 25%+ APR; the interest compounds rapidly and creates a debt trap.