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 a substantial portion of the outstanding balance, you may want to look at refinancing the loan entirely to get a lower interest rate and/or lower monthly ...
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 loan. My loan is through my credit union. I can make an extra payment anytime I want. The form on the website allows me to specify if the payment is to be ...
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 so much), not on $450 (which would be 200% interest per month), your december interest is reduced by about 0.3% (3.7%/12) of $450 (the additional principal you'...
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
Nominal interest compounded monthly is 12*r = 4.91893 %
Effective annual interest is (1 + r)^12 - 1 = 5.03136 %
The former is APR in the US and the latter is APR in ...
My calculation ended up with quite exactly 5.04%, using the rules that would be applied in Europe.
This is how APR would be calculated: You start with 511,200. Every month, 9,628 is subtracted from your debt (and no interest added at this point). Then, after twelve months, the interest is calculated. You owed 511,200 for the first month, 501572 for the ...
Mortgage rules differ by country, and within a country they further differ by the lender.
Assuming this is in the US, and based on my limited experience (2 mortgages), you can only add extra payment on top of a regular payment. For example, if your regular payment is $1000, and you want to pay $500 extra, you make $1500 payment.
Regular portion of the ...
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 like this is what you probably meant. In your example, Dec-19 interest is reduced to what Jan-20 interest would have been without the extra payment.
Yes. One 'trick' to paying your mortgage in an accelerated fashion is to use the amortization schedule, and pay 'next month's principal. That puts you a month ahead on the schedule. Put another way, if you math it, take that principal, and inflate it by applying the interest rate over the time til the current last payment, you'll see they match up. i.e. 1....
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 Sheets solution for cumulative principal paid is to use the =CUMPRINC function.
$500,000 loan, 5% interest, 20 year term, determine the cumulative ...
A regular mortgage has its balance decrease over time (you could say it 'amortizes' over time), because the total monthly payments are higher than the monthly interest charge.
Take a 100k mortgage with 3% interest, with a 30 year term. Monthly interest will be about 100k * .03 / 12 = $250, while the monthly payment will be about $420. Therefore every month, ...
500000 ((1 + 0.1/2)^(1/6) - 1) = 4082.42
Canadian mortgages are compounded twice yearly. The interest rate, 10% is a nominal rate compounded semi-annually.
That is a lower rate than 10% nominal compounded monthly.
As you can see in the table here: Effective interest rate calculation
10% nominal compounded semi-annually =
100 ((1 + 0.1/2)^2 - 1) = ...
It depends on your mortgage company, and how they've set up their web site**. If you happen to be with Bank of America, when you make a payment, you'll be given an option to include an extra amount. If you check this, you then get a choice whether the additional amount will be applied to principle, escrow*, or "other", which I suppose could include such ...
You'll have to read your mortgage contract and/or ask the mortgage company.
Let's say you have a 30 year mortgage with fixed interest rate, and you are supposed to pay $1,000 every month. This month you pay $2,000.
One way the mortgage company can handle this (which is not very nice for you financially) is to stash the $1,000 away, and if you don't pay ...
The interest payment does not "go away", but the amount you have to pay will be reduced. Each month, the amount of interest accrued is based on the remaining balance; a smaller balance means less interest.
You can calculate a new row in the table/schedule the following way:
Interest = 0.003083 * previous balance (result of previous payment)
Payment = ...
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 reduced by 1000*3.7%/12=30.83 You will still make the same payment, but an additional 30.83 will be credited toward principal. The month after that the principal ...
The important figure is how much interest you are saving each month by refinancing, which is what offsets the upfront cost of refinancing over time. (For simplicity, I'm ignoring the increase in your monthly payment realized by moving from a 30-year to a 15-year mortgage and assuming you are OK with the trade-off to pay down the principal faster.)
On your ...
Brexit will probably hurt property values in the short term, but as long as you don't plan on selling in the short term, this isn't that big of a deal. House prices will eventually recover, and rental prices are less wobbly than house prices.
Be sure you know the costs of any common building maintenance fees, and if any big work is coming up that's not ...
Yes, there's a formula, but it's kind of complicated. The formula is:
n is the number of months (assuming monthly payments)
r is the monthly interest rate, expressed as a decimal, e.g. 2% is .02
P is the initial loan amount
m is the monthly payment
b is the balance after n months
Oh, and I'm using "computer notation"...
I’m not aware of any loan product that has interest calculated on actual days in a month. If they did that you would have 4 different interest amounts, one for each month that has 31,30,29, and 28 days. Of course as soon as I say that someone will point out a case where it happens.
If it did exist yes the interest amount and likely payments would be ...
s = principal
r = periodic rate
d = periodic payment
the balance b remaining in month x is
b = (d + (1 + r)^x (r s - d))/r
Applying your figures
s = 5000
r = 5.0/100/12
d = 300
x = 3
b = (d + (1 + r)^x (r s - d))/r = 4159.01
Starting value, three months back
x = 0
b = (d + (1 + r)^x (r s - d))/r = 5000
Or, in your code
$Int = (5.0/100)/12;
You say the current balance is $295,000. So let's say you're 2 months in. Solving for the interest rate
s = principal
d = payment
n = number of months
s = 295000
d = 2400
n = 30*12 - 2 = 358
s = (d - d (1 + r)^-n)/r
∴ r = 0.00759326
∴ effective annual rate = (1 + r)^12 - 1 = 9.50225 %
If you carried on with this for 4 more months the balance ...
There are a few ways that a missed payment disadvantages the lender:
not getting the amount (addressed by the period 6 catch-up payment);
opportunity cost due to not being able to use the amount (addressed by the interest component of a late fee);
hassles of having to make alternate arrangements if the lender was relying on the income to make their own ...