Mortgage Payment Calculator II

How does the mortgage payment calculator work?

This financial tool was designed to help in simulating any mortgage loan plan by two different approaches (Method 1 and Method 2), thus depending on the desired method the user is requested to input these variables:

• In case of first tab the user should know these figures:

- Loan amount taken;

- Loan term in years;

- Annual interest rate % as offered by the lender;

- Payment frequency (weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annually or annually);

- Loan start date month and year;

The payment details which are displayed consist in these details:

- Monthly or any other desired frequency payment value (weekly, bi-weekly, bi-monthly, quarterly, semi-annually or annually);

- Total paid (principal plus cost with interest);
- Total interest paid value;

- Loan term in months;
- Approximate payoff date;

- Amortization schedule with the detailed payment plan.

• In case of the second tab, the algorithm considers the following variables:

- Current mortgage balance;

- Annual interest rate;

- Current monthly payment;

- Additional/extra monthly contribution to the standard payment.

The payment information that is displayed in this case includes the comparison between the two scenarios:

* Payoff WITHOUT an extra monthly payment

- Monthly payment value;

- Number of the remaining payments;

- Time to payoff;

- Total interest paid;

- Total paid;

* Payoff WITH an extra monthly payment

- Additional monthly payment added to the regular one;

- Adjusted monthly payment amount (regular + extra);

- No. of regular payments left;

- Time to payoff;

- Total interest owed;

- Total paid.

* Savings made by paying extra on a regular basis (from the interest not being paid).

* The no. of regular payments you will avoid by paying early.

In both methods the algorithm behind this mortgage payment calculator applies the standard compound interest formula. For instance in case of payments made month by month this equation is:

M = P[i(1+i)^n]/[(1+i)^n -1]

Where:

P = loan amount borrowed / Principal owed

i = interest rate per month in decimal format

n = the term in months obtained by multiplying the loan term in years with 12

Example of 2 scenarios

Case 1: A mortgage plan with the following characteristics:

- Loan amount = $100,000

- Term = 15 years

- Yearly interest rate = 3.8%

- Payments are made on a monthly basis

- Start date is March 2015.

Results:

■ Monthly payment: $729.71
■ Loan amount: $100,000.00
■ Total Paid: $131,346.99
■ Total Interest Paid: $31,346.99
■ Loan term: 180 months
■ Annual Interest rate: 3.80 %
■ Payment frequency: Monthly
■ Payoff date: February, 2030 

Case 2: An existing mortgage loan where the owner wants to see what happens in case he adds extra payment:

- Existing balance = $150,000

- Average annual interest rate = 3.5%

- Current monthly payment = $1,000

- Desired extra payment = $300

Results:

Payoff WITHOUT an Additional/Extra Monthly Principal Payment
■ Monthly payment amount: $1,000.00
■ Remaining payments: 197.56
■ Time to payoff: 16 years & 6 months
■ Total interest paid: $47,555.25
■ Total paid for the mortgage: $197,555.25

Payoff WITH an Additional/Extra Monthly Principal Payment
■ Additional monthly payment to principal: $300.00
■ Adjusted monthly payment amount: $1,300.00
■ Remaining payments: 140.87
■ Time to payoff: 11 years & 9 months
■ Total interest paid: $33,136.17
■ Total paid for the mortgage: $183,136.17

■ Savings made by adding extra monthly payment to principal: $14,419.08
■ By paying early you will make fewer payments in a number of 56.68 payments.