Mortgage Calculators

Mortgages have become inseparable parts of our lives, more so because real estate prices are now so high that only the very rich can afford to buy any of those properties through personal cash. Therefore, most people have to take mortgage loans for buying any real estate properties, which include a necessity called home. Taking a mortgage loan requires some amount of personal finance planning. After all, the installments should fit in the budget. But not everybody knows how to calculate mortgage payment.

Internet solves this problem. There are several mortgage loan calculators on the net. These are interactive, i.e., the visitor has to feed in the data that is asked by the program, and based on this data the mortgage calculators calculate the likely EMI or the equated monthly installment. The data that needs to be provided is the rate of interest applicable on the mortgage loan, the amount of loan that is required, and the period for which this loan is required. Based on these three variables, the tools on the net generate the likely EMI.

But calculating EMI is just one part of any mortgage loan calculator. Most mortgage loans are repaid at regular intervals for a fixed number of years. During this period, the principal, along with interest is paid regularly, i.e., every month. Under normal circumstances, this would mean that the borrower would pay a large amount that would be equal to interest pro-rata, and a small principal. In that way, it would take the borrower his lifetime or even more to repay the mortgage loan. Moreover, it would be difficult to know how much is going to be the next installment, and plan to pay it.

So the lenders developed a new method of calculating interest, and installments. To understand it, let us develop a simple mortgage calculator in an excel sheet. Column A could mark the months. Then column B would contain the loan amount, column C would contain the interest rate, column D would contain the installment, column E would contain interest component of the installment, column F would contain principal part of installment, column G would be for any prepayment that the borrower might choose to do in the month. And column H would be the balance principal carried forward to the next month.

After this, the formula in first row below the titles would have to be inserted. This would be the beginning row. The formula for month would be in column a, and this would be copied down in the column till the number of months becomes equal to the loan term multiplied by 12. In this row, the b column would contain the amount borrowed. The rate of interest would be in the column c, and column d would be an arbitrary installment to be revised. In e column of this row, the formula would be =b x c/100/12. In column f, the formula would be =d-e. If there is any amount of prepayment column g will stock it. As to column h, the formula would be =b-f-g. In the following row, b column would hold the content in the previous row's h. In column c of this row, the formula would be = c of row above. Likewise, in column d also it would be = d above. As to the rest of the cells in this row, the formulae will be copied from row above. Effectively, a template is ready. Now this can be copied for the entire period. In the cell h of the last month, the amount should be as close to zero as possible. If not, the amount of installment in column d in the beginning row should be altered till that amount becomes equal to zero.

This is what the simplest of mortgage amortization calculator has. Amortization implies writing off of the mortgage loan over the period with regular payment. Therefore, part of the EMI is towards mortgage loan repayment, while the other part is the interest on the loan, calculated on pro rata basis.

Since all mortgage loan products are not the same a comprehensive product becomes necessary. There are variations such as some are offered with interest rate that is fixed, while in others the interest rate varies. The above loan mortgage calculator can also double as Mortgage Interest Calculator, Mortgage Payment Calculator, and Mortgage Repayment Calculator. Interest amounts are necessary to be segregated for tax purposes.

Likewise the repayment calculator is essential for determining how much loan has already been repaid. Additional rows and columns can be inserted and grouped containing such information. For getting interest only mortgage calculator slight modification to this calculator is essential. A comprehensive mortgage calculator, if developed would help in understanding the advantages and disadvantages of any offers available in the market.