How to calculate the monthly mortgage payment: formula, example

2024 Author: Howard Calhoun | [email protected]. Last modified: 2024-01-17 18:37

You must have long dreamed of having your own private corner, often imagined yourself in your own apartment or house. But real estate prices are high and constantly growing, not everyone can quickly save up such an amount for a purchase. But what about the dream? And here you should not be upset! A mortgage from Sberbank will help make your dream come true.

Immediately a lot of questions and a little fear of the unknown appear in my head. In fact, there is nothing to be afraid of, you just have to figure out the nuances in advance and calculate your capabilities.

In this article, we will look at how to calculate your monthly mortgage payment. Let's shed light on all the little things related to mortgage lending, and analyze in detail such items as:

• down payment;
• loan amount;
• monthly payment;
• mortgage interest;
• early repayment.

For example, take the following indicators:

1. Property price – 2,400,000 rubles.
2. Interest rate - 10.5% per annum.
3. Credit term - 10 years, or 120 months.
4. Early payment - 200,000 rubles.

Down payment

Before proceeding to the calculations, you need to find out the minimum percentage of the down payment on a mortgage at Sberbank. To obtain a loan, you must have an amount that may be greater than or equal to the required minimum. If we subtract it from the price of the property, we get the loan amount. In Sberbank, the initial mortgage payment starts at 15%, a good offer and quite achievable result.

For example: 2,400,00015%=360,000 rubles - down payment.

Mortgage amount

The amount of the loan or the missing amount, minus the down payment on the mortgage at Sberbank, is the amount of the loan.

For example: 2,400,000 – 360,000=2,040,000 rubles - the amount of the mortgage.

Types of payments

Before we start all sorts of calculations, let's figure out what payments are. Calculation of payments on a mortgage loan can be applied according to an annuity or differentiated scheme.

Annuity payment means a permanent one, in which monthly payments are equal throughout the entire term of the borrower's loan obligation to the bank. The most common scheme, since it is economically beneficial for the lender. For borrowers, there is also a plus - that every month the amount is the same and it will be difficult to get confused in payments.

Differentiated means variable payments thatmonthly go to reduce the amount to repay the loan. This scheme is quite labor-intensive, which requires a lot of time to calculate the payment schedule. With a differentiated system, the borrower will be able to save a lot of money on overpayment, but for banks this significantly increases the risks, so they are less likely to offer such systems.

Counting information

We figured out the types of payments. Can't wait to learn how to calculate your monthly mortgage payment. It is necessary to take into account several factors for this:

1. The price of real estate - the higher it is, the greater the monthly payment.
2. Loan term - the longer it is, the lower the monthly installment, but the interest for using the loan will have to be paid longer.
3. The solvency of the borrower - it is believed that the amount of the monthly payment should not exceed 40% of income.
4. Loan interest rate - the exact rate can be found after applying in the loan offer or take the average bank rate.

Calculation of payment under the annuity scheme

In Russia, this type of payment has become very popular because of its constancy and stability, which is favorable for the borrower and lender. As mentioned above, this is economically beneficial for the lender, but it will be easier for the borrower to plan their costs, since the amount of the fee is the same throughout the duration of the loan agreement.

How to calculate the monthly mortgage payment? The formulas below will help you individually calculate and decide onloan amount.

x=KS;

K=(p(1 + p) ) / (1 + i) – 1) where:

x is the monthly annuity amount.

S – mortgage amount.

p – monthly interest rate, if the rate is annual, then take 1/12 part and divide by 100.

n – loan duration in months.

K – annuity ratio.

For example: K=(0. 00875(1 + 0. 00875)¹²⁰) / (1 + 0. 00875)^{120– 1)=0, 02489 / 1.84463=0.01349;}

x=0.013492040000 ≈ 27520 rubles.

Payment schedule

Period	Minimum payment	Paying the principal debt	Payment %	Remaining principal debt
0	2,040,000
1-30 days	27 520	9 914	17 606	2 030 086
2-30 days	27 520	10,000, 08	17 519, 92	2 020 085, 92
3-31 days	27 520	9 505, 26	18 014, 74	2 010 580, 66
4-31 days	27 520	9 590, 03	17 929, 97	2 000 990, 63
5-30 days	27 520	10 251, 18	17 268, 82	1 990 739, 46

There are 2 more simple ways to calculate. The first is to use the loan calculator on the official website of the bank of interest. Consider the second method, how to calculate the monthly mortgage payment. You can do this in a table. Excel. Open a new file, go to the "Formulas" tab, then "Financial" and select "PLT". A window will pop up, where in the first line we indicate the number of interest divided by 12 months (for example, 10.5% / 12/100), in the second - the number of months, and in the third - the amount of the loan.

Calculating interest

If you look at the annuity payment schedule, you will notice that the interest decreases monthly, respectively, the amount in payment of the principal debt increases. Below is a formula for how to calculate mortgage interest.

% Mortgage=(ODPnum. days between dates) / num. days of the year.

• OD - the main debt in the billing month;
• P - annual rate divided by 100;
• number of days between dates - the difference between the dates of the current installment and the previous one;
• number of days in a year - current year.

For example: %=(2,040,0000, 10530) / 365 ≈ 17,606 rubles.

Calculation of payment according to a differentiated scheme

How to calculate the monthly payment on a mortgage under a differentiated payment system? This type of payment includes two components: the main debt, which decreases over the entire loan period, and interest on the loan, they also decrease throughout the entire loan period.

The amount of the contribution consists of the main monthly payment and interest on the balance of the main debt. Let's analyze the formulas, how to calculate the main payment and how to calculate mortgage interest according to a differentiated systempayment:

Basic payment formula:

b=S / n where:

• b - basic monthly payment;
• S – mortgage amount;
• n – loan duration in months.

Formula for calculating accrued interest:

p=SnP, where:

• p – accrued interest;
• P - annual % rate / 12 / 100;
• Sn – balance of debt in the period.

Calculate the balance of debt in the period, the value of Sn:

Sn=S - (b n), where:

• S – mortgage amount;
• b - basic monthly payment;
• n – number of periods elapsed.

Payment calculations for this system are made in each period, usually every month.

For example: b=2,040,000 / 120 ≈ 17,000 rubles;

Sn=2,040,000 - (17,0000) ≈ 2,040,000 rubles;

p=2,040,0000.00875 ≈ 17,850 rubles

Differentiated payment=17,000 + 17,850 ≈ 34,850 rubles

Payment schedule

Period	Remaining principal debt	Main payment	%	Payment amount
0	2,040,000	17,000	17 850	34 850
1	2,023,000	17,000	17 701, 25	34 701, 25
2	2 006 000	17,000	17 552, 5	34 552, 5
3	1,989,000	17,000	17 403, 75	34 403, 75
4	1 972000	17,000	17 255	34 255
5	1,955,000	17,000	17 106, 25	34 106, 25

Early repayment

Such a mortgage repayment scheme is quite beneficial for the borrower, since the overpayment in the form of interest is charged less. The difference in calculations is only in the calculation of the mortgage balance, where not the main monthly payment is taken, but the difference between the planned installment and accrued interest.

If you pay a mortgage more than the monthly payment, then the balance of the debt and interest on the loan are subject to change. Let's figure out how to calculate all these amounts.

First of all, you need to find out the balance of the mortgage debt for the current period by scheduling a payment schedule for the type of loan issued or looking at the schedule provided by the bank. All our calculations will go from this amount.

Important to know:

• .
• From the amount you wish to deposit, part of the funds will go to pay interest, as described above, and the rest to pay the principal.

Here are two examples for each type of loan.

For example, according to the annuity scheme, 3 periods were paid, and 10 days after the last payment you decided to deposit 200000 rubles

The annuity ratio remains the same and equals 0.01349.

The balance of the debt is 2,010,580.66 rubles.

Now we need to calculate how much interest for 10 days you have to pay to the bank and how much will go to the debt.

%=(2,010,580.660.10510) / 365 ≈ 5,783.9 rubles

Amount in payment of the main debt=200,000 - 5,783.9=194,216.1 rubles.

Sn=2,010,580.66 – 19,4216.1 ≈ 1,816,364.52 rubles - the balance of the debt.

Remember that on the next settlement date you will be charged interest for the remaining 20 or 21 days in the period.

The second case will be for a differentiated type of charging. Paid 4 periods, and on the 5th payment date you decided to deposit 200,000 rubles

Sn=2,040,000 - (17,0004)=1,972,000 rubles.

%=1,972,0000.00875 ≈ 17,255 rubles.

Amount in payment of the principal debt=200,000 – 17,255=182,745 rubles.

Sn=2,040,000 - (17,0004 + 18,27451)=1,789,255 rubles.

So, knowing all the basics and calculations, you can easily estimate the amount of a mortgage that will be easy for you to pay. In return, you will acquire real estate, where you and your family will create your own home comfort. A place where you will celebrate the New Year and celebrate birthdays.