Mortgage Calculator

Using Mortgage Calculator

1. The payment comes from the standard annuity formula: P = L·i / (1 − (1+i)^−n), where L is the amount borrowed, i is the periodic interest rate, and n is the number of payments.
2. The annual rate is divided by twelve to give the monthly rate. A 6% headline rate is treated as 0.5% per month.
3. Each row of the schedule applies interest to the outstanding balance first, then puts whatever remains of the payment toward the principal. This is why early payments are almost entirely interest and later ones are almost entirely capital.
4. An extra monthly amount is applied directly to principal. Because it removes balance that would otherwise accrue interest for the remaining term, the saving compounds - which is why a modest overpayment can shorten a 30-year term by several years.
5. Total interest is the sum of every interest component across the schedule, not an approximation.

Where mortgage calculator helps

Before you use the result

• This calculates principal and interest only. Property taxes, buildings insurance, private mortgage insurance, HOA or service charges, and ground rent are excluded. A lender's monthly figure is often 20 to 40 percent higher once these are escrowed.
• The figure will not match a lender's APR quote. APR folds arrangement fees, broker fees, and certain closing costs into a single annualised rate, so it is deliberately higher than the interest rate used here.
• The schedule assumes a fixed rate for the full term. On a variable, tracker, or adjustable-rate product it is accurate only until the first rate change.
• Many mortgages cap annual overpayments, commonly at 10 percent of the outstanding balance, with early repayment charges beyond that. Check your terms before relying on an overpayment plan.
• Payments are assumed to arrive exactly monthly. Biweekly schedules produce thirteen monthly equivalents per year and pay down faster than this model shows.

Questions about Mortgage Calculator

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