Securing a home loan is a significant financial undertaking. Understanding how your repayments are calculated is crucial for budgeting and financial planning. This calculator helps you estimate your regular home loan payments based on key variables.
The Math Behind the Calculation
The calculation for a home loan repayment is based on the annuity formula, which determines the fixed payment amount required to amortize a loan over a set period. The formula takes into account the principal loan amount, the interest rate, and the loan term.
The standard formula for calculating the payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly loan repayment
P = The principal loan amount (the amount you borrowed)
i = Your periodic interest rate. This is typically the annual interest rate divided by the number of payment periods per year (e.g., annual rate / 12 for monthly payments).
n = The total number of payments over the loan's lifetime. This is the loan term in years multiplied by the number of payments per year (e.g., loan term in years * 12 for monthly payments).
How the Calculator Works:
Loan Amount (P): The total sum you are borrowing from the lender.
Annual Interest Rate (%): The yearly interest rate charged on the loan. This is converted into a periodic rate by dividing it by the number of payment periods in a year. For example, a 5% annual rate with monthly payments becomes 5% / 12 = 0.4167% per month.
Loan Term (Years): The total duration of the loan, usually expressed in years. This is converted into the total number of payments by multiplying by the number of payments per year. A 30-year loan with monthly payments will have 30 * 12 = 360 payments.
Payment Frequency: This determines how often you make a payment (e.g., monthly, bi-weekly, weekly). A higher frequency generally means more payments per year and can lead to slightly faster principal reduction, though the total interest paid might be similar due to the adjusted periodic rate.
Why is this important?
Knowing your estimated repayment allows you to:
Budget effectively: Ensure you can comfortably afford the monthly payments.
Compare offers: Evaluate different loan products and lenders.
Understand affordability: Determine how much house you can afford based on your income and debt obligations.
Plan for the future: Visualize your long-term financial commitment.
Disclaimer: This calculator provides an estimated repayment amount. Actual loan repayments may vary due to lender fees, specific loan terms, and changes in interest rates (if applicable). It is always recommended to consult with a mortgage professional or financial advisor for personalized advice.
function calculateRepayment() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var paymentFrequency = parseInt(document.getElementById("paymentFrequency").value);
var resultDisplay = document.getElementById("result").querySelector("span");
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) || isNaN(paymentFrequency) ||
loanAmount <= 0 || annualInterestRate < 0 || loanTermYears <= 0 || paymentFrequency <= 0) {
resultDisplay.textContent = "Invalid input. Please enter valid numbers.";
return;
}
// Calculate periodic interest rate
var periodicInterestRate = (annualInterestRate / 100) / paymentFrequency;
// Calculate total number of payments
var numberOfPayments = loanTermYears * paymentFrequency;
var monthlyRepayment = 0;
if (periodicInterestRate === 0) {
// Handle case with 0% interest rate
monthlyRepayment = loanAmount / numberOfPayments;
} else {
// Calculate monthly repayment using the annuity formula
monthlyRepayment = loanAmount * (periodicInterestRate * Math.pow(1 + periodicInterestRate, numberOfPayments)) / (Math.pow(1 + periodicInterestRate, numberOfPayments) – 1);
}
// Display the result, formatted as currency
resultDisplay.textContent = "$" + monthlyRepayment.toFixed(2);
}