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I'm wondering how does you calculate payment amount of the loan amortization schedule if insurance is involved. "Desjardins" insurance on loan is such that for every $1000 outstanding balance, you get a charge of $.38, $150,000 x .38/1000 = $57
To help with clarification, below is a sample amortization schedule with insurance.
Each month, the lender adds the month's interest to the outstanding balance and then subtracts the payment received.
In this case, the lender adds an extra charge, still proportional to the outstanding balance, before crediting the payment.
So, the effect of the insurance is the equivalent of increasing the monthly rate by 0.038 percentage point.
So, if the monthly rate is 0.25%, a new rate of 0.25+0.038, or 0.288% should be used to find the regular payment, principal in any payment, "interest + insurance" in any payment, and to find the balance owing after each payment.
In the "interest + insurance" amount, 0.038/0.288 of it is insurance, the rest is true interest...
It's identical to calculating the payment based on the rate plus .038%. The calculations for FV shouldn't be any different than normal as FV doesn't care if you are paying that fee or interest. Had the fee been fixed it would be different. But as a percent of owed balance I believe my approach is correct.
