Mortgage Calculator Repayment Calculator

Monthly Payment Formula:

\[ M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (M):

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1. What is a Mortgage Repayment Calculator?

Definition: This calculator determines the fixed monthly payment (M) required to repay a loan (P) with interest (r) over a specified term (n).

Purpose: It helps borrowers understand their monthly mortgage obligations and compare different loan scenarios.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( M \) — Monthly payment (USD)
\( P \) — Loan principal amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of payments (loan term in years × 12)

Explanation: The formula calculates the fixed payment needed to fully amortize the loan over its term, accounting for compound interest.

3. Importance of Mortgage Calculation

Details: Accurate payment calculations help borrowers budget effectively, compare loan offers, and understand the long-term cost of borrowing.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include property taxes and insurance?
A: No, this calculates only the principal and interest portion (P&I) of a mortgage payment.

Q2: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid over the life of the loan.

Q3: What's the difference between APR and interest rate?
A: The interest rate is the base cost of borrowing, while APR includes fees and other loan costs.

Q4: How often are mortgage payments compounded?
A: Most mortgages use monthly compounding, which this calculator assumes.

Q5: Can I use this for other types of loans?
A: Yes, it works for any fixed-rate amortizing loan (car loans, personal loans, etc.).