Plan your home financing effectively with our mortgage amortization calculator excel. This professional-grade tool helps you visualize your payment schedule, interest costs, and principal reduction over time, simulating a robust Excel-style amortization model.
Mortgage Amortization Calculator Excel
Yearly Breakdown
Mortgage Amortization Calculator Excel Formula
Source: Investopedia – Amortization Schedule Fundamentals
Variables:
- M: Total monthly payment.
- P: The principal loan amount.
- i: Monthly interest rate (Annual Rate / 12 months).
- n: Number of months in the loan term (Years * 12).
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What is Mortgage Amortization Calculator Excel?
A mortgage amortization calculator excel is a mathematical framework used to determine how much of each monthly payment goes toward the principal and how much goes toward interest. In the early years of a mortgage, the majority of your payment covers the interest. As the loan matures, a larger portion is applied to the principal balance.
Professional financial analysts often use Excel templates because they allow for “what-if” scenarios, such as making extra principal payments. Our web-based tool replicates the precise “PMT” and “IPMT” functions found in Microsoft Excel to ensure high-accuracy financial planning.
How to Calculate Mortgage Amortization (Example)
- Identify Loan Principal: For example, $200,000.
- Convert Interest Rate: If rate is 6% annual, monthly is 0.005 (0.06 / 12).
- Calculate Payments: For 30 years, n = 360 months.
- Apply the Formula: Solve for M to find the fixed monthly amount.
- Track the Balance: Subtract the interest of month 1 from M to find the principal paid.
Frequently Asked Questions (FAQ)
What happens if I pay extra each month? Paying extra principal reduces the “n” (term) of your loan and significantly lowers the total interest paid.
Does this include escrow? No, this tool calculates the “P&I” (Principal and Interest) payment. Taxes and insurance are separate costs.
Why is interest higher at the start? Interest is calculated based on the remaining balance. Since the balance is highest at the beginning, the interest charge is also highest.
Is 30 years better than 15? 15-year mortgages usually have lower interest rates and lower total costs but require much higher monthly payments.