## A mortgage calculator

It is a well-equipped mortgage calculator that deals with the many questions that arise when buying a home with a **home loan.**

It allows you to

- balance your payments with different types of loans
- and compare them to its linked costs, especially its interest rates.
- you can easily track the progress of your annual balances
- gives you a detailed picture of your mortgage loan.

## What is a mortgage?

Legally, a home loan is a legal agreement in which a bank lends money to borrowers to take over the debtor’s property. The bank holds this title until the debtor has repaid the full amount owed.

## How to Use a Mortgage Calculator?

Use this **mortgage home calculator**

- set a home price and a down payment

It will give you the amount of money that you can afford to buy a home. This amount will be the **principal** amount that you need to repay on loan.

- Fill in the interest rate.

If you need help finding out what your interest rate is, you can use our interest calculator.

- Set your current payment

- analyze the results.

**Annual Balance**- track the progress of your annual balances.
- check what will be the principal paid
- and interest paid at the end of the year as you move into the loan period.
- how much money is left to be paid.
- the year in which you repay the entire loan amount.

**Mortgage Summary**

you can learn

- what the exact date of your payment is,
- how many installments you need to make,
- what the total amount of your loan is,
- and what the total interest is.

**Total Payment Divide by Percentage**

We see the

- total interest rate,
- private home insurance,
- and other costs associated with the original loan amount.

**Amortization Table**

you need to take into account all the costs that the bank may be charging or requiring. It is especially important when there are long-term debt associated with low interest rates. However, if you encounter any other costs, you can add them as other costs to the calculation.

## Mortgage payment formula| Calculate mortgage payment

If you would like to know how to **calculate a mortgage payment **on your own, the equation is the following. For the matter of simplicity, we represent here a simplified version of the equation that doesn’t incorporate all features involved in the calculator.

`MP=P[r(1+r)`

^{n}/(1+r)^{n}-1]

- MP = monthly payment
- P = principal
- r = monthly interest rate**
- n = number of months you will have to repay your loan for

**To calculate your monthly interest rate simply divide the annual interest rate by 12.

Let’s do an example calculation. To do that, we need to know: the principal amount, monthly interest rate, loan period/number of payments. You can find this information in your mortgage loan agreement. For our purposes, we will assume the following numbers:

- our principal (P) equals 100 000 EUR
- our loan period is 20 years – that is 240 months, therefore “n” = 240
- the annual interest rate amounts to 5%, this divided by 12 equals 0.004 (0,05/12) and this is our “r”

Now, we can get on with the calculation:

`MP=100 000[0.004(1+0.004)`

^{240}/(1+0.004)^{240}-1]

To make it easier, we will add 1 to the “r”

`MP=100 000(0.004*1.004`

^{240}/1.004^{240}-1)

In the next step we have to raise the “(1+r)” (in our example 1,004) to the power of “n” (in our example 240). It is best to use a calculator (put in the value to be raised, than press the x^{y} button and enter the “n” value, then press “=”) or an excel sheet (use the POWER function: =power(number to be raised,power). The number in our case is: 2.607. Now our equation would look like this:

`MP=100 000(0.004*2.607/2.607-1)`

Let’s simplify again and multiply the “r” times the result of raising to power (the top value) and subtract “1” from the result of raising to power on the bottom:

`MP=100 000(0.01043)/1.607`

All that is left to do now is to divide the numerator by the denominator…

`MP=100 000*0.006490`

…and there you go: your monthly payment is 649.03. If you want to know what the total sum of all your payments will amount to, just multiply your monthly payment (MP) by the number of months you will pay your loan (n). In our example it would be:

`649.03*240=155767.2`

When you know what your total payments will be, you can also calculate how much you will pay the bank for loaning you money. Just subtract your principal from your total payments. In our case the costs of our loan would amount to 55 767.2 EUR.