How to Calculate Monthly Mortgage Repayments

Borrowers take out mortgages to purchase homes.

When you consider buying a home, you need to budget how the monthly payments are going to fit into your budget. Depending on the interest rate and the term, you may be able to afford a larger or smaller loan than you expected. To calculate monthly mortgage payments, you need to know the term of the loan, the interest rate and the amount borrowed.

Instructions

1. Figure the monthly interest rate on your mortgage, expressed as a decimal, by dividing the annual interest rate expressed as a percentage by 1,200. For example, if your interest rate is 8.04 percent, you would divide 8.04 by 1,200 to get 0.0067.

2. Multiply the number of years in the term of the mortgage by 12 to calculate the number of payments you will make on your loan. For example, if you had a 30-year mortgage you would multiply 30 by 12 to find you would make 360 monthly payments.

3. Add one to the monthly interest rate. In this example, you would add 1 to 0.0067 to get 1.0067.

4. Multiply the result from step 3 by itself M times, where M equals the number of monthly payments you will make over the life of the loan. In this example, you would multiple 1.0067 by itself 360 times to get 11.06686724.

5. Subtract 1 from the result from step 4. In this example, you would subtract 1 from 11.06686724 to get 10.06686724.

6. Multiply the result from step 4 by the monthly interest rate expressed as a decimal. In this example, you would multiply 0.0067 by 11.06686724 to get 0.074148011.

7. Divide the result from step 6 by the result from step 5. In this example, you would divide 0.074148011 by 10.06686724 to get 0.00736555.

8. Multiply the amount borrowed for your mortgage by the result from step 7 to find the monthly payment. In this example, if you borrowed $207,000, you would multiply $207,000 by 0.00736555 to find your monthly mortgage payment to be $1,524.67.

References

• How to Calculate Mortgage Payments

Resources

• Bankrate: Loan Calculator