1. What is the Mortgage Payment Formula?

The standard mortgage amortization payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( PMT \) — Monthly payment amount
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in months)

Explanation: This formula calculates the fixed payment that will pay off the entire loan balance plus interest over the specified term.

3. Importance of Mortgage Payment Calculation

Details: Accurate mortgage payment calculation is essential for financial planning, budgeting, loan comparison, and determining affordability when purchasing property.

4. Using the Calculator

Tips: Enter the principal amount in your local currency, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and total number of monthly payments. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual interest rate to monthly?
A: Divide the annual interest rate by 12. For example, 6% annual rate = 0.06 ÷ 12 = 0.005 monthly rate.

Q2: What's included in the monthly payment?
A: This calculation includes principal and interest only. Actual mortgage payments may also include property taxes, insurance, and PMI.

Q3: How does loan term affect payments?
A: Longer terms result in lower monthly payments but higher total interest paid over the life of the loan.

Q4: Can I calculate payments for different compounding periods?
A: This formula assumes monthly compounding, which is standard for most mortgages.

Q5: What if I want to include extra payments?
A: Extra payments reduce the principal faster and shorten the loan term, requiring more complex amortization calculations.