Questions tagged [amortization]

any question related to the amortization of loan. Also refered to as EMI or repayment schedule

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6 votes
4 answers
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How exactly does a biweekly payment schedule on your mortgage reduce the amount of overall interest paid over the life of the loan?

Here is how a normal fixed-rate monthly amortization schedule is calculated: First we determine the total monthly payment: Payment = [P*(r / n)(1 + r / n)^nt] / [(1 + r / n)^n*t - 1] where n = 12, P ...
Nova's user avatar
  • 161
0 votes
0 answers
82 views

How to prepare constant annuity amortization table for a simple interest loan?

My company (in which I work) offers a home loan of ₹60,00,000 with simple interest. It is written in terms and conditions of this loan that principal shall be repaid in not more than 225 monthly ...
Retired Hurt's user avatar
-1 votes
1 answer
136 views

How to solve amortization schedule where 10% of the interest is paid back on 4th payment

I am trying to find an algorithm to solve this amortization schedule: P = 1000, term = 12 months, Interest=5%, calculation based on actual/365. 10% of the total interest of the loan is added to the ...
Hiroshi's user avatar
  • 11
2 votes
1 answer
162 views

How is the time saved calculated if you do an overpayment on a mortgage to reduce the term?

I would like to know the equation to work out how much money is saved if you make an overpayment on a mortgage to reduce the term. There is a promotional rate for the interest, and a standard variable ...
Iria's user avatar
  • 123
0 votes
2 answers
288 views

Are there any amortized home mortgage loans where the monthly payments are distributed equally between interest and principal?

Are there any type of home mortgage loans where the amortized monthly payments are equally distributed towards the interest and principal? I understand this would violate the current formulas used to ...
Ali Vand's user avatar
1 vote
1 answer
100 views

If APY factors compounding (while APR doesn't), shouldn't APY always be higher than APR?

So, from what I understand: APR: rate advertised to borrowers (without compounding) APY: rate advertised to lenders (with compounding) So, for a loan with APR of 6%, that compounds monthly: APY = (...
António Gonçalves's user avatar
-5 votes
3 answers
255 views

Why aren’t amortized loans outlawed and replaced with a more equitable model to the borrower?

I completely understand that banks are in the business of making money and capitalism prioritizes profit above all other values. However why aren’t laws enacted that would ban amortized loans and ...
Ali Vand's user avatar
0 votes
1 answer
261 views

Creating an amortization schedule for a loan with variable interest that compounds 2x per year

Has anyone created an amortization schedule for a loan with a variable interest rate that also compounds 2x per year? The loan has a set payment amount (15k monthly), but because the interest is ...
Erin A's user avatar
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1 vote
2 answers
110 views

Additional principal payment split between interest and principal [duplicate]

I made an additional payment with my first mortgage payment but I noticed that although I designated the additional payment, say $10, as principal the remaining principal balance didn't go down by the ...
heretoinfinity's user avatar
3 votes
1 answer
148 views

Alternative (simplified) way of calculating loan repayments

I'm working on a small program to calculate, among other things, mortgage/credit repayments. Searching the internet I got what appears to be the typical repayment formula. principal 100,000 at 2% ...
mogoman's user avatar
  • 133
0 votes
1 answer
54 views

Subtract D&A is necessary

I read Warren Buffett and the interpretation of the financial statements, but depreciation and amortization thing still confuses me a lot. When I look at the Microsoft's income statement (i.e. https://...
J.Doe's user avatar
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18 votes
1 answer
4k views

Why does the TD Bank principal portion of a mortgage payment go up and down in sawtooth? (why is interest payment on annuity in arrears non-monotonic)

I'm trying to understand the amortization schedules of TD mortgages, as produced by the TD Calculator. The monthly payment amounts (on this fixed rate mortgage) are predictable and constant, but the ...
pf_init_js's user avatar
1 vote
2 answers
124 views

Is this a weekly compounding loan amortization schedule?

I am currently having a disagreement with my colleagues regarding whether a loan is compounding or not. I have linked below an image of a amortization schedule for a 52 week term for a $50,000 loan. ...
LongJohnSilver's user avatar
2 votes
2 answers
223 views

How can I calculate amortized payment when the payments are made in advance?

I'm trying to calculate the payment amount on an amortized loan with interest where the payments are made in advance. If the payments are made in arrears there's a simple formula, but since the first ...
Dadveloper's user avatar
1 vote
1 answer
161 views

Formula for calculating a reamortization

So my friend recently recasted/reamortized a loan. Initially, they had a principal loan balance of $13,000 at an interest rate of 5.99% over 7 years (84 months). They verified the loan company's ...
Nona's user avatar
  • 121
4 votes
2 answers
3k views

How To Optimize Loan Payback?

Say I have a $100k 3% mortgage with min $1k payment, $10k 5% car loan with $100 min payment and $1k 20% credit card with $50 min payment. If I have $1500 to spend, I need to split that to pay back at ...
Joe Beuckman's user avatar
1 vote
2 answers
192 views

Does partial prepayment on interest only loans goes towards principal

I am applying for 30 year term, 7/1 ARM with 10 year interest only loan. This is what I received from my lender: My question: During interest only period, if I make partial prepayments, does it ...
OpenStack's user avatar
  • 127
1 vote
1 answer
330 views

Interest only mortgage with extra payment towards principal

I am planning to take 30 year term 10 year interest only mortgage. I know following are pros can cons of this approach: Pros: possible free money, especially given low interest rates lower payments (...
OpenStack's user avatar
  • 127
0 votes
1 answer
91 views

Which method to amortize my single family rental and what else do I need to know?

I am renting out my primary residence (outside the US) for about $1400/mo., which method to amortize my single family rental on my 1040 and what else do I need to know to correctly amortize? I started ...
user1422331's user avatar
9 votes
5 answers
4k views

Do bank use the same math formula to calculate the mortgage amortization table?

I've started making a spreadsheet to evaluate mortgages and how they would fit other financial plans. The most complicated part seems to be the mortgage calculation formula. That's the formula the ...
TheMeaningfulEngineer's user avatar
0 votes
1 answer
105 views

Modeling wealth over time in a home [closed]

Suppose a person decides to buy a house and finance it by taking out a mortgage. I am attempting to model the wealth of this person over time. I need some help deciding whether this system of ...
Taylor's user avatar
  • 187
1 vote
1 answer
308 views

Remaining Balance Formula for Actual/360 and Actual/Actual Accrual Methods

Is there a concise formula for calculating the remaining balance of a loan with actual/360 and actual/actual accruals? I know for 30/360 amortizations, the remaining balance is just the FV of the ...
ZAR's user avatar
  • 111
1 vote
1 answer
2k views

Formula for time taken to pay off loan with annual interest and monthly repayments

I am trying to find how to work out the period of time it will take to pay off a loan. There are plenty of online calculators out there but I cannot find the formula they use. I want to recreate the ...
myol's user avatar
  • 113
3 votes
6 answers
3k views

What is a fair way to split the profits for a co-owned property?

Seeking out some financial guidance... My partner and I recently purchased a home with my sister and brother-in-law. All spaces will be shared with the exception of bedrooms. We will be meeting with ...
Willy's user avatar
  • 31
2 votes
1 answer
393 views

Loan Amortization with first payment period less than others

I'm trying to make loan amortization schedule where Interest rate is calculated on the exact period dates. (installment dates taking into account weekends and public holidays) and with the first ...
Tamuna Kochladze's user avatar
0 votes
0 answers
34 views

Interest and principal line-item amounts for seasonal mortgage

I'm working with this question: Seasonal Loan Amortization. I wondered if someone could elaborate how to calculate the principal and interest portions of the payments when they are paid. The article ...
bc888's user avatar
  • 1
2 votes
1 answer
85 views

Is the principle payment in an amortization schedule the amount that goes towards how much of the house you own?

When I first learned of amortization schedules I was confused by the division of payments into "interest" and "principle". I think I get it now: isn't it that the principle payment ...
user avatar
1 vote
1 answer
681 views

How are fractional cents handled when bank create a loan payment schedule

I am working on developing my own loan payments schedule generator and I have a question regarding how fraction cents For example, this load: Principal: $10,000 Interest: 5% per year Period: 48 ...
Michel's user avatar
  • 11
1 vote
2 answers
10k views

'principal balance' vs 'outstanding balance'

Is 'principal balance' same as 'Outstanding Balance'? My understanding is - In amortisation schedule, Outstanding balance gets reduced according to 'principal' portion of your monthly payment. After 6 ...
DBD's user avatar
  • 111
7 votes
1 answer
3k views

What is the typical compounding/amortized period on US mortgage loans

In a different question it is stated that Mortgages are compounded .. 12 times a year in the USA Is this true or just applicable to that question? I am looking at a site where it explains how to ...
puzzled's user avatar
  • 1,016
0 votes
1 answer
169 views

How does depreciation deduction work in mortgages?

Home investors are said to be concerned that the depreciation deductions exceed mortgage amortization. This is because the depreciation remains flat but the amount of amortization rises, albeit slowly,...
Frank Swanton's user avatar
1 vote
1 answer
352 views

Paying USD 1000 towards the principal on my mortgage

I bought a home worth 200,000 paid 20% down, my interest rate is 4%, 30 yr fixed Remaining Loan 160,000. Initially, lets say I pay around 1000 USD (200 toward my principal and 800 towards my interest)....
Venkata's user avatar
  • 11
1 vote
1 answer
302 views

When I capitalize amortization table, the present value doesn't equal the sum of PV or the XNPV

How is it that when I capitalize an amortization table, the present value doesn't equal the sum of PV or the XNPV formula of all the future payments? If I capitalize the future payments with the same ...
Omer's user avatar
  • 65
1 vote
1 answer
192 views

Refinance Cost is high

I got 30 years loan for 232K two years ago with interest rate of 4.25% and now I am planning to refinance again for 15 years. Financial company mentioned they can provide interest of 2.85% but the ...
user10930212's user avatar
5 votes
7 answers
5k views

How does paying extra on my mortgage affect my amortization schedule?

I am a first time home buyer and have some spare cash after my home purchase to pay forward quite a bit of money (cash was not available during actual purchase, so, no, I could not have put it towards ...
Runeaway3's user avatar
  • 2,898
0 votes
1 answer
90 views

"Negative Amortization" Terminology

I want to better understand the term "negative amortization". For example, in the Graduated Payment Mortgage (GPM), people often say it usually has negative amortization as the loan balance increases ...
Frank Swanton's user avatar
2 votes
2 answers
164 views

Mortgage: Floating rate loan tenure extension on rate increase

I am trying to figure out how my bank has implemented re-pricing on my floating rate home loan. The original home loan was for an amount of ₹ 48 lakhs (₹ 4.8 Mn) at an annual rate of interest (RoI) ...
tchakravarty's user avatar
2 votes
4 answers
1k views

Do extra mortgage payments typically go directly towards principal?

I have a 30 year mortgage and I'd like to make extra payments each month to speed up the amortization schedule. I thought this would be better than taking out a 15 year mortgage as it gives me some ...
Brhecht's user avatar
  • 21
2 votes
1 answer
163 views

Buy 1 bed flat via private sell (Edinburgh, UK) - opportunity?

I am renting a flat (1 bed + box room) with my partner in 'central' Edinburgh. We pay £675 pcm. Our landlady wants to sell it urgently and she asks for £160,000. She is keen to sell it to us. A ...
Antonio Andrés's user avatar
0 votes
1 answer
146 views

Future balance of loan balance [duplicate]

I would like to know if there is a formula that could tell me the future balance of a loan. For example, if I have a loan of 10,000 at 6% for 5 years and I do the amortization it brings that the ...
kprincipe's user avatar
  • 103
4 votes
3 answers
627 views

How do I calculate APR from monthly instalments?

I have been given a quote for a car loan in Thailand. I want to calculate the APR but am not sure how. (All of the tools and explanations I’ve seen are going in the other direction, from a percentage ...
Kit Johnson's user avatar
1 vote
1 answer
100 views

Does the amortizing payment on a loan depend on whether interest is calculated daily or monthly?

Assume two banks offer a $100,000 mortgage at 6% annual interest for 30 years with payments due monthly. One bank assumes each month has 30 days. The other bank uses the actual number of days in ...
user348514's user avatar
1 vote
1 answer
733 views

Formula for previous months interest payment and balance - Reverse Amortization

I am trying to resolve an issue I am having where a system calculated incorrect additional payments on a loan for a couple of months, resulting in the new current balance being incorrect. I want to ...
Travis Johnston's user avatar
-1 votes
1 answer
790 views

how to find flat rate of interest per annum and month if we have given reducing rate of interest or loan amount and tenure?

For example: For loan amount 500000 for 5 years at the rate of 12% (reducing interest rate), EMI is 11,122.22 per month Here 12% reducing is equivalent to flat 6.69% per annum or flat 0.55% per month. ...
Raj Sharma's user avatar
2 votes
1 answer
56 views

Calculating Interest with Compute Method as Canadian - Semiannual

i'm trying to validate a software Interest Calculation. The defaults given are as followed. Interval: Monthly Nominal Annual Rate: 10% Disbursal Amount: $500,000 Disbursal Date 01/01/2018 Payment ...
user3276954's user avatar
4 votes
2 answers
347 views

Mortgage principal reduction

For a 30-year mortgage that started less than a year ago, how much will the monthly payment be after making an additional $100,000 payment towards the principal? The mortgage currently has a balance ...
Elsadig Elmardi's user avatar
1 vote
1 answer
258 views

How to calculate payment and accrued interest on a mortgage when one payment missed (D30)?

How is the interest and principal payment calculated when mortgage has already missed one payment? Are the new payments calculated off the new balance (non-amortized balance) or the original scheduled ...
toing's user avatar
  • 133
1 vote
1 answer
3k views

How to calculate EMI for Quarterly, Half yearly and Annual payments and generate amortization schedule?

I am a software engineer by profession. I am a newbie to finance. I am trying to create a loan amortization schedule. I have the formula for EMI= P*(r*(1+r)^n)/((1+r)^n)-1. How to apply it for ...
gokul's user avatar
  • 11
1 vote
1 answer
62 views

How to calculate interest on Monthly Effective loans where duration greater than compounding

I have an amortization software and trying to manually calculate the interest accrued it calculated. The Key values are: Compounding: Monthly Nominal Annual Rate: 10% Day Count: 365 Principal: 500,...
user3276954's user avatar
2 votes
2 answers
510 views

Partially vs. Fully Amortized Loan

Isn't the article beneath wrong to interpret a Fully Amortized Loan as a loan with 7 years maturity? Isn't the correct comparator a Fully Amortized Loan with 30 years maturity, and 30 years ...
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