41 votes
Accepted

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 fairly sure this is because they're including the fact that months aren't all the same length. This is obscured because they don't actually include the relevant dates with the results, or even ...
cjm's user avatar
  • 1,005
23 votes

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

Actually, mortgages do not "compound" at all. Compounding means that interest is charged on top of past interest, which is not true for mortgages. Conforming mortgages in the US use simple interest, ...
D Stanley's user avatar
  • 135k
20 votes
Accepted

How To Optimize Loan Payback?

A rule of thumb is to overpay high interest first - but that means I pay more interest longer on the bigger loans. If you're dealing with fixed rates it's always most efficient to pay off the higher ...
Hart CO's user avatar
  • 70.5k
17 votes
Accepted

What is the difference between an amortized loan and a non-amortized loan?

Amortizing loans pay off some of the value of the loan (otherwise known as principal) with each payment, whereas non-amortizing loans only pay the interest, so the full value of the loan is still owed ...
MD-Tech's user avatar
  • 8,955
17 votes

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

Banks don't necessarily use the same formula, but in most countries they must disclose the effective interest you'd be paying (which may vary from the nominal interest due to extra charges and ...
littleadv's user avatar
  • 174k
11 votes

How To Optimize Loan Payback?

Hart is absolutely right about paying the highest rate first. Sometimes if the rates are close I'd suggest paying the lowest balance first (to get it knocked out), but your lowest balance happens to ...
D Stanley's user avatar
  • 135k
11 votes

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

Such a product does not exist. And it would be pretty unlikely that you'd be able to get such a thing past a regulator and ensure that you as a lender actually make money. Let's work through the ...
Justin Cave's user avatar
  • 27.3k
8 votes

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

It depends on how the loan is set up and the lender's policy towards early payments. If the loan is set up with a monthly payment then the payment amount can be computed based on that formula where n=...
D Stanley's user avatar
  • 135k
7 votes

Partially vs. Fully Amortized Loan

Their examples adequately demonstrate the difference between partially amortized and fully amortized loans, especially since it's in the context of commercial lending, where 30-year terms are uncommon....
Hart CO's user avatar
  • 70.5k
7 votes

Mortgage principal reduction

It will most likely be $2,380. This will depend on the specifics of your mortgage contract, but the monthly payment generally won't automatically change in this situation. If you're paying off such ...
yoozer8's user avatar
  • 9,514
7 votes

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

For every loan I have had the last payment was a slightly different amount. The delta was to account those fractions of cents. For a 30 year loan the delta would be at most $3.60 for the last payment....
mhoran_psprep's user avatar
6 votes
Accepted

What is the math used to calculate the impact that overpaying a mortgage has an an amortization table?

The underlying calculations are simple, and you can easily replicate them. Let's look at the first few months. Month 1: Balance = Initial balance = 300,000 Interest = Balance * Rate = 300,000 * (0....
void_ptr's user avatar
  • 3,128
6 votes

Do extra mortgage payments typically go directly towards principal?

In your title you ask what happens typically. In the body of the question you ask if you have to specify how the extra payment will be treated. The answer is you have to ask your lender about your ...
mhoran_psprep's user avatar
6 votes

Paying USD 1000 towards the principal on my mortgage

Initially, lets say I pay around 1000 USD (200 toward my principal and 800 towards my interest).(May not be accurate numbers) Now the balance left on my mortgage is 159,000. This is incorrect. Your ...
RonJohn's user avatar
  • 50.7k
6 votes

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

The mathematics on which the usual formula is based is that the sum of the payments d, each discounted to present value (PV) by 1/(1 + r)^k, should equal the initial (present value) value of the loan ...
Chris Degnen's user avatar
  • 9,797
5 votes

How can I amortize 4 rates over a 30 year term?

Your remaining principal balance will be $38,528.86. And you will have paid $8,238.03 in interest. You can calculate this (or any other amortization) with a fairly basic spreadsheet. Put your ...
CactusCake's user avatar
  • 3,463
5 votes
Accepted

Calculating amortisation payment amount, where first payment date differs from loan start date

I calculated 14098.64 and 14098.74. Here are the methods. First, what I would say is more mathematically correct. For a loan with equal payment periods we have the standard formula below. pv = ...
Chris Degnen's user avatar
  • 9,797
5 votes
Accepted

Credit Card Amortization via Principal-Only Payments

Credit cards don’t have fixed monthly payments like a mortgage or other traditional loan. As a result, there isn’t really a distinction between “principal-only” payments vs. future pre-payment as ...
Ben Miller's user avatar
  • 116k
5 votes

Credit Card Amortization via Principal-Only Payments

Outside of any payment plan that might be set up, credit cards don't amortize - they charge interest on the unpaid balance at the end of the month, without regard for previous months, and then add ...
Magua's user avatar
  • 5,097
5 votes
Accepted

How do I calculate APR from monthly instalments?

Yes, about 5% With monthly rate r and principal s = 511200 payments d = 9628 no. months n = 5*12 Equating net present values Solving for r s = (d - d (1 + r)^-n)/r ∴ r = 0.00409911 ...
Chris Degnen's user avatar
  • 9,797
5 votes

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

Interest does not "disappear", but it is reduced in proportion to your outstanding principal balance. Interest accrued in a pay period (month) = Principal balance * Interest rate (monthly) It sounds ...
void_ptr's user avatar
  • 3,128
5 votes

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

People already answered, but the point is you have a flaw in your thinking. December interest is not interest on december's principal payment amount. You're paying interest on $300k (which is why it's ...
xyious's user avatar
  • 2,778
5 votes
Accepted

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

If you prepay your mortgage you reduce the principal balance, reducing the interest due next month and every month forward. If you prepay $1000 on your mortgage, the interest next month will be ...
Ross Millikan's user avatar
5 votes
Accepted

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

You're muddling up two things but you're very close. Say you buy a house for $100,000. You have $20,000 of your own and you borrow $80,000 from the bank. At that moment you have equity of $20,000. In ...
Kate Gregory's user avatar
  • 13.2k
5 votes

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

Fair is obviously in the eye of the beholder and whatever the four of you agree to is, by definition, fair. Were it me, I'd do something like this Initially, sister and brother-in-law own 500,000/ 2,...
Justin Cave's user avatar
  • 27.3k
5 votes

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

If you restrict how much profit the bank can make from lending, you'll get less lending. And that will prevent a lot of people from getting loans at all. If we're talking about a $500k loan, that's ...
Justin Cave's user avatar
  • 27.3k
5 votes

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

Payment = [P*(r / n)(1 + r / n)^nt] / [(1 + r / n)^n*t - 1] where n = 12, P is the loan, and r is the interest rate. If the periodic rate is given as r / n with n = 12 months, this implies that the ...
Chris Degnen's user avatar
  • 9,797
4 votes

Term loan overpayment options: applied to principal, or...?

It may have been the standard practice for a long time, and indeed it still is the common practice for my credit union to apply all excess payment directly to the principal. At the risk of sounding a ...
SlowTalk's user avatar
  • 168
4 votes

How do I calculate the principal paid down on a mortgage?

These are some great answers & I don't want to take away from the detail they provide, but I saw in a comment you mentioned you were looking for a Google Sheets solution for this. An easy Google ...
Wick's user avatar
  • 141
4 votes

How do I calculate the principal paid down on a mortgage?

The question is: "I'd like to know how much I'd have in principal paid off against the mortgage after n periods." It is slightly unclear whether you want the principal repaid or the principal ...
Chris Degnen's user avatar
  • 9,797

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