This **payment calculator** figures either your monthly mortgage payment for a loan with fixed term or the time to payoff your debt with a fixed regular payment. There is in depth information on this subject below the web form.

## How does this payment calculator work?

This application has 2 tabs each one designed to handle mortgage payment calculation for a specific method:

- First tab is named “Payment by fixed term” and allows users estimate the regular monthly payment based on a given loan amount borrowed, payment frequency, term in years an annual interest rate and a desired estimated repayment start date.
- Second tab is named “Term by Fixed Payment” and allows users forecasting the time to pay off the mortgage debt by taking account of the amount borrowed, regular payment amount, payment frequency and an annual interest rate and an estimated start date.

Its *algorithm* takes account of the compound interest formula and generates an amortization schedule presenting the repayment plan on a monthly basis. It is a very flexible application as it allows choosing between different payment frequencies such as: weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annually or annually.

This *payment calculator* can be used to simulate the details of any type of loan with *fixed interest rate* such as: personal or student loan, home loan or mortgage and even boat, business or car loan.

## Example of a result

In case of a loan of $100,000 let’s take the following 2 scenarios and check their results.

**Scenario 1:** determine the regular payment in case its term is 10 years, the frequency is monthly and the interest rate is 3.5%.

Loan Details:

■ Monthly payment: $988.86

■ Loan amount borrowed: $100,000.00

■ Total Paid: $118,663.04

■ Total Interest Paid: $18,663.04

■ Loan term: 120 months

■ Annual Interest rate: 3.50 %

■ Payment frequency: Monthly

■ Payoff date: November, 2024

**Scenario 2: **determine the time to be debt free in case its desired regular payment is $1,200, the frequency is monthly and the interest rate is 3.5%.

Loan Details:

■ Monthly payment: $1,200.00

■ Loan amount borrowed: $100,000.00

■ Total Paid: $115,935.63

■ Total Interest Paid: $15,935.63

■ Loan term: 97 months

■ Annual Interest rate: 3.50 %

■ Payment frequency: Monthly

■ Payoff date: January, 2023

## Personal loan payments

Usually a personal loan has a shorter term than other similar financial products as the amount borrowed is limited to a few thousands while its interest rate is higher than in case of a mortgage loan for instance due to the fact that it does not require any warranty. Its frequency may vary from weekly, bi-weekly or monthly and usually stars within the next month from the moment they money were borrowed. Depending on the loan type they can either be fixed or variable payments. Typically fixed payments on personal loans are higher than variable payments as fixed interest rate is set up a higher levels due to a risk component related to the evolution of the rate within a specific time frame, that the bank takes into account.

## Student loan payments

Students usually choose to repay the loan after the graduation time as they start registering incomes from being employed. Student loan payments level depends on the frequency chosen and its interest rate is usually smaller than in case of other loans. They are variable payments as they depend on a variable interest rate.

## Commercial and business loan payments

They are usually either monthly, quarterly, semi-annually or annually as they are taken by considering a business plan that forecasts the cash flow. They are variable payments as they are impacted by a floating interest rate.

## Mortgage loan payments

As a mortgage or home loan is taken for a period of up to 30 years, its most used payment frequency is monthly. Repayment in this case is impacted by an interest rate that is lower than in case of a simple loan as a warranty is given. Needless to say that the mortgage repayments are variable in most cases, but there are some banks that offer a fixed level for the first years, usually up to 5 years.

## Car loan payments

An auto loan is usually taken for a period of up to 5 years and its payment usually take place on a monthly basis. It should be mentioned that the payments can be either fixed or variable payments. The same goes with boat loan payments.

## Fixed or variable payments?

As we explained above depending on the financial product there are many cases in which the client cannot choose to pay a fixed or variable payment as there are certain rules he should comply with. However, in case someone needs to decide whether to accept an offer with fixed versus an variable interest (implicitly fixed or variable regular payment) he should consider few things:

- Usually fixed payments include a higher interest rate as the bank has to ensure the client pays a fixed level of interest that is high enough in case its percent goes up in the future.
- Usually variable payments are advised in case you expect the interest rate goes down;
- Usually fixed payment is preferred in case you expect the interest rate goes up.

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