## Mortgage Payment Calculator

The mortgage payment loan calculator loan shall allow you to calculate the monthly installment amount that is required to be paid on the loan, which is taken wherein interest is paid at periodically, reducing the principal amount.

#### Mortgage Formula

[P x R x (1+R)^N]/[(1+R)^N-1]

- P / pv is the loan amount
- R / rate is the rate of interest per annum
- N / nper is the number of period or frequency wherein loan amount is to be paid
- PMT is the EMI amount

### About the Mortgage Payment Calculator

In order to use this simple mortgage payment loan calculator, one needs to know the principal amount, the loan period, the rate of interest.

One can also include property taxes, insurance, and PMI if payable. We just need to divide these payments by loan period and add back to monthly installment. PMI stands for private mortgage insurance, which is only required when the loan amount is greater than 80% and is usually provided at a fixed basis point, and it may get canceled when the equity amount crosses 20%.

### How to Calculate the Monthly Installments?

One needs to follow the below steps in order to use this simple mortgage payment loan calculator to calculate the monthly installment amounts.

**Step #1 –** First of all, determine the loan amount required. Banks usually provide more loan amount to those who have a good credit score and less amount to those who have a lower credit score. First, we shall enter the principal amount:

**Step #2 –** Multiply the principal by the rate of interest

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**Step #3 –** Now, we need to compound the same by rate until the loan period.

**Step #4 –** We now need to discount the above result obtained in step 3 by the following:

**Step #5 – **After entering the above formula in excel, we shall obtain installments periodically.

**Step #6 – **One can also obtain periodical installments by entering below basic excel formulas:

**PMT(rate, nper, pv, fv, (type))**

### Mortgage Calculator Examples

#### Example #1

Harry had a dream of purchasing a house in the metro city wherein he was working and currently staying on rent basis. The flat that proposes to buy is costing around $140,800. He has maintained a good credit score as he was paying all the dues on the credit card within due dates, and that also the total amount due and not the minimum amount dues.

Therefore, when he applied for a housing loan, he was approved 80% of the property value. He already had equity of more than 20% and hence decided to take a loan for the approved amount. The rate of interest applicable to this loan was 8.5% fixed. He wants the loan tenure to be 20 years, and he wanted installments to be paid on a monthly basis. Based on the above information, you are required to calculate the EMI amount, which is equally monthly installments.

The EMI amounts will begin at the end of the period.

**Solution:**

- We need to calculate the EMI amount, for that first, we shall calculate the loan amount, which is 140,800 * 80%, which is 112,640.
- The number of periods it is required to be paid in 20 years, but since here Harry is going to pay monthly hence the number of payments that he shall be required to be paid is 20*12, which is 240 equally installments and lastly, the rate of interest is 8.5% fixed which shall be calculated monthly which is 8.5%/12 which is 0.71%.

**Now we shall use the below formula to calculate the EMI amount.**

Therefore, the EMI amount for Mr. Harry for 20 years on the loan amount 112,640 shall be 977.52

#### Example #2

Mr. J proposes to purchase a vehicle on a monthly installment basis. The loan amount that was approved 100% for the purchase of a vehicle which was $25,000. The loan period is 10 years, and the rate of interest is 11% compounded annually.

The loan has to be repaid on a monthly basis. Further to that, Mr. J is also required to pay an insurance amount of $2,500, which can be clubbed with the EMI amount. Based on the above information, you are required to calculate the total monthly outgo amount and the excess amount paid as interest.

**Solution:**

We need to calculate the EMI amount; for that first, we shall calculate the loan amount, which is 25,000 * 100%, which is 25,000. The number of periods it is required to be paid is 10 years, but since here Mr. J is going to pay monthly hence the number of payments that he shall be required to be paid is 10*12, which is 120 equally installments and lastly, the rate of interest is 11.00% fixed which shall be calculated monthly which is 8.5%/12 which is 0.71%.

Now we shall use the below formula to calculate the EMI amount.

- The monthly outgo for the insurance amount will be $2,500/120, which is $20.83.
- Therefore, the EMI amount for Mr. J for 10 years on the loan amount of $25,000 shall be $20.83.
- Total interest outgo equals to ($344.38 * 120) – $25,000 which is $16,325

### Conclusion

This is a very simple mortgage payment loan calculator wherein we have incorporated a fixed rate of interest. However, there are loans in the market that shall also offer a floating rate of interest wherein the calculation for the remaining period changes from the date of change of interest, and accordingly the interest and EMI amount shall either increase or decrease. Usually, loans with fixed-rate have comparatively higher than floating rates as the Banks are locking in the interest rate for a longer period.

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