Mortgage Payment Loan Calculator in Excel
Mortgage Calculator in excel is not a built-in feature in excel but we can make our own mortgage calculator using some formulas, to make a mortgage calculator and calculate the amortization schedule we need to create our categories column for all the categories and data to be inserted and then we can use the formula for mortgage calculation in one cell, now for future, we can change the values and we have our mortgage calculator in excel.
Formula to Calculate Mortgage Payment in Excel
Like many other excel mortgage calculator, we have the formula to calculate the monthly EMI amount as well. In order to calculate the monthly EMI in excel, we have a built-in function called PMT function.
PMT function includes 3 mandatory and 2 optional parameters.
- Rate: This is nothing but the interest rate applicable to the loan. If the interest is per anum then you need to convert this to monthly payment by just dividing the interest rate by 12.
- Nper: This is simply the duration of the loan. In how many EMI’s you are going to clear the loan. For example, if the loan tenure is for 2 years then loan tenure is 24 months.
- Pv: This is the present value of the loan amount you are taking. Simply the borrowing money i.e. loan mount.
All the above three parameters are good enough to calculate the monthly EMI but on top of this, we have two other optional parameters as well.
- [FV]: This is the future value of the loan. If you ignore this default value will be zero.
- [Type]: This is nothing but whether the loan repayment is at the start of the month or at the end of the month. If it is at the start then the argument is 1 and if the payment is at the end of the month then the argument will be zero (0). By default, the argument will be zero.
Mr. A wants to buy a car and the cost of the car is Rs 600,000. He approached the bank and the bank agreed to sanction the loan based on the below conditions.
- Down Payment: Rs 150,000
- Loan Tenure: 3 years and above
- Interest Rate: 15% PA.
Now Mr. A wants to evaluate his monthly savings and decide on the loan taking possibilities. In excel using the PMT function, we can calculate the EMI.
- Step 1: Enter all this information in Excel.
- Step 2: Open PMT function in the B7 cell.
- Step 3: The first thing is the rate, so interest rate select B6 cell. Since the interest rate is per anum we need to convert it to month by dividing the same by 12.
- Step 4: NPER is the number of payments to clear the loan. So loan tenure is 3 years i.e. 3*12 = 36 months.
- Step 5: PV is nothing but loan amount Mr. A taking from the bank. Since this amount is a credit given by the bank we need to mention this amount is negative.
- Step 6: Close the bracket and hit enter. We have an EMI payment per month.
So, in order to clear the loan of Rs 450,000 in 3 years at an interest rate of 15% Mr. A has to pay Rs15,599 per month.
Things to Remember
- You need to fill the only orange colored cell.
- The loan amortization table will show the breakup of the Principal Amount and Interest Amount each month.
- It will also show you the extra amount you are paying as a percentage.
This has been a guide to Mortgage Calculator in Excel. Here we discuss how to prepare a mortgage loan payment calculator using PMT Formula along with practical examples and downloadable excel template. You may learn more about excel from the following articles –