Mortgage Loan Calculator with Amortization
Loan Details
Monthly (12)
Bi-monthly (24)
Weekly (52)
Loan Summary
Estimated Monthly Payment:
$0.00Total Payment Over Life of Loan:
$0.00Total Interest Paid:
$0.00Amortization Schedule
| Payment # | Payment Date | Starting Balance | Payment Amount | Principal Paid | Interest Paid | Ending Balance |
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Understanding Your Mortgage Loan and Amortization Schedule
A mortgage loan is a significant financial commitment used to purchase real estate. It's a loan secured by property, meaning if the borrower defaults on payments, the lender can seize the property. Understanding the terms of your mortgage, including the interest rate, loan term, and payment structure, is crucial for effective financial planning.
How the Mortgage Payment is Calculated
The monthly mortgage payment is primarily determined by three factors: the principal loan amount, the annual interest rate, and the loan term. The formula used to calculate the fixed periodic payment (M) is derived from the annuity formula:
$$ M = P \frac{i(1+i)^n}{(1+i)^n – 1} $$
Where:
- P = Principal loan amount
- i = Periodic interest rate (Annual rate divided by the number of payment periods per year)
- n = Total number of payments (Loan term in years multiplied by the number of payment periods per year)
For example, if you have a $200,000 loan at 5.5% annual interest over 30 years with monthly payments:
- P = $200,000
- Annual rate = 5.5% or 0.055
- Monthly rate (i) = 0.055 / 12 ≈ 0.0045833
- Loan term = 30 years
- Total payments (n) = 30 * 12 = 360
What is an Amortization Schedule?
An amortization schedule is a table that breaks down each mortgage payment over the life of the loan. It shows how much of each payment goes towards the principal and how much goes towards interest. Crucially, it also displays the remaining balance after each payment.
Initially, a larger portion of your payment goes towards interest, and a smaller portion goes towards the principal. As the loan matures, this trend reverses, with more of your payment applied to the principal, accelerating the repayment of the loan and reducing the total interest paid over time.
Key components of an amortization schedule include:
- Payment Number: The sequential number of the payment.
- Payment Date: The date the payment is due.
- Starting Balance: The outstanding loan balance at the beginning of the payment period.
- Payment Amount: The total fixed payment made (Principal + Interest).
- Principal Paid: The portion of the payment that reduces the loan balance.
- Interest Paid: The portion of the payment that covers the interest accrued for that period.
- Ending Balance: The remaining loan balance after the payment is applied. This becomes the starting balance for the next period.
Using the Calculator
This calculator allows you to input your desired loan amount, annual interest rate, and loan term in years. You can also select the payment frequency (e.g., monthly, bi-monthly, weekly), which impacts the number of payments per year and the total interest paid. Click "Calculate Mortgage" to see your estimated monthly payment, total payment over the loan's life, total interest paid, and a detailed amortization schedule.