![]() ![]() ![]() Interest-only mortgages offer some significant advantages for the right kind of borrower. An interest-only calculator like this one can help you predict what those payments will be. However, after a certain length of time, often 5-10 years, you do have to begin paying down the balance on the loan. You don’t have to make any payments against the loan principle, at least not initially. About interest-only mortgagesĪs the name indicates, an interest-only mortgage is one where you only pay the interest charges. This will include the projected increase during the amortization phase of the mortgage, as you begin paying down the loan principal. Then, click View Report to see how your repayment plan will look throughout the duration of your mortgage. When you click Calculate, you will see what your monthly payments will be during the initial, interest-only phase of the loan. Click Prepayments to input any additional payments you plan to make during the Interest Only phase.Choose the number of years that will make up the Interest Only phase of the mortgage repayment plan, and the Interest rate.From the drop-down list, select the number of years you believe you will need to pay off your mortgage.Use the slider to set your intended mortgage amount, or just type it into the box. ![]() » MORE: Compare top mortgage refinancing lenders How to use the Interest-Only Mortgage Calculator Enter your information in the fields below, then using the sliding controls to experiment with how changing your prepayments, interest rate, length of interest-only period, etc. It will show you how much you can reduce your loan balance by making additional payments and the interest you can save by doing so. This Interest-Only Mortgage Calculator is designed to help you figure out the costs and payments associated with an interest-only mortgage. For some borrowers, an interest-only mortgage can offer an attractive way to minimize their mortgage payments while preserving the option to make payments against loan principle when they wish. Why is the total interest higher than that of a standard mortgage?Īfter practically disappearing during the Great Recession, interest-only mortgages are making a comeback.Notes on the Interest-Only Mortgage Calculator.Can you still get an interest-only mortgage?.How to use the Interest-Only Mortgage Calculator.We can visualize the impact with a nice chart (requires some extra work) like this:ĭo check the download workbook for details on how the chart is setup. Go ahead and play with the table by typing some values in the “Extra payment” column. Step 3: Your mortgage will end when the “Eff. Closing Balance is opening balance minus principal paid minus extra payment.Ĭomplete this table with necessary formulas and fill everything down.Extra Payment is the input column where we can type any extra payments.We can get this with the PPMT() function. Principal Paid is the amount of principal paid in each month.=ROUND(NPER($E$7/12,$E$10,$D13),0) will tell us how many months it is rounded. We can use NPER function to get the answer here. Effective term is how long it would take you to pay off the mortgage based on the opening balance, and agreed upon monthly payment (calculated in Step 1) and interest rate (Cell E7).For subsequent months, this will same as previous month’s closing balance. Opening Balance is same as loan amount for month=1.Related: Read about SEQUENCE and other Dynamic Array functions in Excel. You can use =SEQUENCE(360) to automatically generate all the months. So, set up a range of 360 months (or longer if you want to cater for longer mortgages). In my case, let’s say loan is $500,000, term is 20 years and APR (Interest rate) is 5.35% per annum.Īs extra payment will bring down the outstanding loan term, we need to set up an amortization table to see the impact clearly. Step 1: Calculate the monthly (or weekly / fortnightly) payment:Īssuming you have the Loan amount, term & APR in three cells E5, E6 & E7, we can use the PMT() function to calculate the periodic payment. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |