Piggyback Mortgage Calculator

A 400,000 home with a 10% deposit splits into an 80% first mortgage (320,000 at 5%) and a 10% second mortgage (40,000 at 7.5%) — a combined 1,997.51 a month over 30 years. Splitting the borrowing this way can sidestep the mortgage insurance some lenders require on a single high loan-to-value mortgage. The second loan carries a higher rate, which offsets part of that saving.

What moves the number most

The first loan dominates: a percentage point on its rate adds about 200 a month in the sample figures, while the same point on the second loan adds about 28, because the first loan is eight times the size. Halving the deposit from 10% to 5% pushes the difference onto the second loan and adds about 140 a month. Property price scales every figure proportionally.

The formula behind this

Each loan runs the standard amortisation formula — a level payment fixed by its amount, monthly rate, and the shared term — and the two payments are summed. The split sizes the loans: the first takes its stated percentage of the price, and the second covers whatever the deposit and first loan leave.

Why this structure exists

The structure exists because of a threshold: in some markets, borrowing above 80% of a property's value on a single loan triggers mortgage insurance. Keeping the first loan at 80% and stacking a smaller second loan on top keeps the main borrowing under that line — the question the numbers answer is whether the second loan's higher rate costs less than the insurance it avoids. This calculator shows the two-loan side of that comparison; the insurance side comes from a lender's quote.

Typical scenarios for piggyback mortgages

• Buyers with 10–20% deposit who want to avoid a single high-ratio loan with insurance costs
• Properties where the deposit sits just below a conventional mortgage insurance threshold
• Cases where two separate loans at different rates cost less in total than one conventional loan plus insurance
• Refinancing an existing loan where keeping the main balance at 80% of the value avoids re-triggering insurance, with the extra borrowing taken as a separate second loan

A second scenario at a different deposit level

A property priced at 500,000 with a 15% deposit (75,000) leaves 425,000 to finance. A piggyback structure uses 80% (400,000) at 4.8% for the first loan and 5% (25,000) at 6.5% for the second. Over 25 years, the combined monthly payment works out to about 2,460. In markets where high loan-to-value mortgage insurance applies, splitting the loan can avoid that premium — though the second loan's higher rate offsets part of the saving, so the totals can end up close.

What the result shows and does not show

Shows: the combined monthly principal and interest payment across both loans; how the second loan rate affects total outgoings; sensitivity to deposit size and property price.

Does not show: mortgage insurance premiums; the impact of tax relief on interest (if available in your jurisdiction); early repayment penalties; the risk that the second loan's rate may rise over time while the first stays fixed; lender availability or approval odds; the legal or administrative complexity of managing two separate loans.

Educational illustration

This calculator is designed for illustrative purposes. Results estimate monthly payments based on the inputs you enter. Actual costs depend on your lender's terms, current market rates, your credit profile, and the property location. This output compares loan structures in principle; the figures can be checked against a lender or broker quote.