mortgage amortization calculator

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When you pay off your mortgage according to an amortization schedule, it means making payments in monthly installments over the life of the loan. These payments apply to the principal and interest of the loan. Usually, earlier in the repayment period, more payments go towards interest.

Most mortgages are amortized, so you know exactly how much you owe each month and there are no surprises. You can estimate your monthly payment schedule using an amortization calculator such as the one below.

How to use the Mortgage Amortization Calculator

Housing loan Amortization A calculator is a useful tool for estimating how your payment schedule will break down by month. Enter your loan amount, repayment period, interest rate, and loan start date to see your monthly payments and the number of payments you will make over the life of your loan. It also shows the total interest and total repayments, as well as the expected repayment date.

You also have the option to indicate if you plan to make additional payments to see how much you can save on interest and if you can shorten the repayment period.

Mortgage Amortization Calculator Definition

  • Loan Amount: This is the amount borrowed from the mortgage company to purchase the home.
  • interest rate: Lenders charge interest in exchange for allowing you to borrow money.your mortgage interest rate The amount charged as interest, expressed as a percentage of the loan principal.
  • Loan period: This is the number of years you have to pay off your mortgage. Common mortgage terms include 10, 15 and 30 years oldbut other terms are available.
  • Number of payments: This represents the total number of monthly payments you make over the life of the loan. For example, if you have a 15-year loan, you will have about 180 monthly payments.
  • Monthly payment amount: This is the amount you have to pay each month. Part of this goes to the principal of the loan and the rest goes to the interest.
  • additional fee: Making additional payments can be a good strategy if you want to pay off the loan faster.
  • Lump sum payment: If you have extra money in the bank, you might decide to put it toward your mortgage. This is known as a lump sum payment. In this case, you have the following options: Mortgage reviewwhich does not change the loan term or interest rate, but can reduce monthly payments with a shorter amortization period.
  • principal and interest: Loan principal is the exact amount borrowed from the lender. Interest is what you pay the lender in exchange for borrowing money. Monthly payments are split between principal and interest. Payments early in the life of the loan typically cover more interest, while later payments apply primarily to the principal.
  • Gross interest: This is the total amount you pay as interest over the life of the loan.
  • Total cost of loan: This is the total amount you will pay on your mortgage, including both principal and interest.
  • Payoff date: This is the date you plan to pay off the entire loan.

What is Mortgage Amortization?

Mortgage amortization is a financial term that refers to the process of paying off a mortgage in monthly installments according to an amortization schedule. A mortgage amortization schedule shows how your monthly payments will be split. principal and interest And how this changes over time as loan repayments increase.

Generally, most of the payments go towards paying interest compared to the original principal at the beginning of the term of the loan. That is, interest is paid up front at the beginning of the loan term. However, this will reverse itself over time, eventually paying more for principal and less for interest over the course of the loan.

How amortization calculations can help

Calculating your mortgage amortization can help you figure out some important details about your loan, such as:

  • Monthly payment for principal and interest
  • Total amount paid so far each month and amount still outstanding (current or future date)
  • What is the total interest and repayment costs?
  • How to save interest or shorten the repayment period by making additional payments

You can also use the Mortgage Amortization Calculator to estimate information such as how much and how much you will need to pay in addition to pay off your loan by a certain time. residential property you built

How to pay off your mortgage faster

There are some strategies that can help you pay off the mortgage early like that:

  • Make additional payments. put a little extra in the loan each month or make extra payments each year, biweekly payment Instead of monthly, this allows you to pay off your loan faster and save interest.
  • Recast. If you have additional funds in your bank, or if some money unexpectedly comes in, consider making a full mortgage payment and recasting the loan. This will not change the interest rate or term, but it will reduce your monthly payments. And if you choose to put your savings towards a loan, you can pay it off even faster.
  • Refinance. You can also consider home loan refinancing, where the old loan is paid off with a new loan on different terms.Depending on your credit, this could be even cheaper interest ratewhich can save you interest and help you pay off your loan sooner. may increase.

Be aware that some lenders charge a prepayment if you are going to do pay off a mortgage Ahead of schedule, check with your lender or review your loan agreement to see if any of these fees apply.

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