How to calculate mortgage payments

Mortgage calculator

The mortgage calculator makes calculations based on data known to the user. The calculator is applicable to mortgages from any bank, which allows you to consider all the offered options, compare benefits, and plan repayment. You should not neglect detailed calculations, because a mortgage is a serious banking product that does not allow default on obligations, which means it is better to calculate everything in advance. The calculator requires a minimum amount of input data:

• housing costs;
• an initial fee;
• credit term;
• interest rate;
• repayment scheme.

In addition to the above points, there are lines for entering possible bank fees that affect the size of the loan. It is proposed to enter information about:

• one-time commission;
• monthly commission;
• annual commission.

What is included in the total price?

The full cost of a mortgage is made up of a whole series of payments. In addition to the loan amount and interest paid, the price includes:

• payment for annual insurance;
• commission for issuing a loan and maintaining an account;
• penalties and fines for violations of the contract.

Therefore, when determining the total cost of the loan, it is convenient to use a mortgage calculator as an assistant. Let's carry out calculations using it.

Calculation options using a mortgage calculator: we will calculate the total cost of a mortgage in the amount of 2,500,000 rubles. Down payment 400,000 rubles. Interest rate – 9.5%. The loan term is 10 years.

The monthly payment is 27,173 rubles. The total cost of the mortgage is 3,260,818 rubles.

We will increase the loan term to 30 years and make a recalculation.

The monthly payment will be a third less, 17,658 rubles, but the total cost of the loan will greatly increase and amount to 6,356,858 rubles, almost twice as much. Such is the arithmetic!

Advantages of an online calculator

For those who value time and money, the advantages of an online calculator will be obvious. Users are deprived of the need to visit several banks to collect information on the terms of mortgage lending. Data about all banks is collected in one place, which allows you to find out the amount of payment and overpayment when registering in any of them.

From the first advantage it follows that potential borrowers can choose the bank and the program that suits them in all respects. The decisive factors when applying for a mortgage are the size of the payment and the amount of overpayment; the calculator allows you to find out where they are minimal. In addition, you don’t have to waste time at the bank finding out the details; all that remains is to sign the documents.

Annuity or falling balance?

Those who want to understand how mortgage loans are calculated need to study theoretical calculations, methods of calculating interest, and current formulas. It is necessary to understand that paying off a mortgage involves several types of payments:

• an initial fee;
• monthly payment, which is used to repay the principal and interest;
• comprehensive insurance of the property plus the life and health of the borrower, additional banking services.

In reality, two schemes for calculating regular payments are used: annuity and the “falling balance” model. The payment amount, the structure of debt repayment and the amount of overpayment will depend on the chosen scheme. Let's consider the methods in detail.

The annuity model involves payments in equal installments throughout the entire contract period. First, interest is calculated for the entire term, then it is added to the loan body and divided by the number of payments.

It turns out that the first payments go almost entirely to paying interest. The loan body does not decrease. And repaying a loan early is not particularly profitable. But inflation works for the borrower. Gradually, regular payments depreciate in value.

Calculation options using a mortgage calculator: for example, with a mortgage amount of 1,500,000 rubles for 15 years at 10% per annum, the regular monthly payment will be 16,119 rubles. And it will remain so for all subsequent years.

The differentiated model (or Falling balance) assumes that the regular payment consists of two parts , a fixed amount from the loan body and an interest payment that decreases every month. At first, the borrower will have to pay large sums, but gradually the payments become smaller. The total amount of overpayments in this case is also less, and it is also beneficial to repay the loan ahead of schedule.

Payment options: under the same mortgage lending conditions, but with differentiated payments, the down payment will be 20,833 rubles. And the last one is 8,403 rubles.

To carry out independent calculations, you need to know the following numerical parameters:

1. mortgage amount
2. down payment (how to get an apartment with a mortgage without a down payment?)
3. interest rate,
4. lending period (months).

At the next stage, select the desired request and read. All theoretical calculations are confirmed by practical calculations.

Payment schedule

Carrying out independent calculations is difficult; the process requires good mathematical skills and accuracy.

The formula for the monthly annuity payment looks like this: X = S * (P + P / (1 + P)n – 1),

wherein:

• X refers to the monthly payment;
• S is the original mortgage amount;
• P – 1/12 of the interest rate;
• n – number of months.

To calculate the differentiated payment, two formulas are used. It is easy to calculate the size of the regular payment; the amount of the principal debt is divided by the number of months.

The formula looks like this - Y = S / N, where:

1. Y – amount of the main payment;
2. S – mortgage size;
3. N – number of months.

The amount of interest payment for each month must be calculated individually, using the formula -

Z = Sn * P / 12, where:

• Z – accrued interest;
• Sn is the balance of the principal debt;
• P – annual interest rate on mortgage.

Over a ten-year period, 120 payments will have to be calculated. Therefore, it is much easier to use assistant programs.

Mortgage calculation

Calculating a mortgage using an online calculator is not difficult and will not take much time. To obtain the final data, you must fill in several fields. It is possible to change the values ​​of any of them to calculate a profitable option that suits all parameters. Below are instructions for filling out the fields of the mortgage calculator:

1. The cost of housing is filled in based on the average market price for real estate of the size, condition, and location of interest. So the result obtained will be close to the actual one. If an apartment for purchase with a mortgage has already been selected and its exact cost is known, this exact amount is entered into the calculator window.
2. The down payment is filled based on the loan amount that the client can make at the first stage of the transaction. The loan amount is the difference between the cost of housing and the down payment, so the larger it is, the less amount you will need to pay monthly.
3. The loan term can be specified in years or months. The chosen unit of measurement will not affect the final result and years are used for long-term contracts. You can enter any value into the line, but it is worth remembering that the longer the period, the higher the amount of the final overpayment.
4. The interest rate may differ in different banks and in the same bank for different mortgage programs. It is important to enter the correct values, otherwise the calculation may not be relevant.
5. The user can choose a repayment plan. It is not recommended to skip this point, since both the size of payments and the total overpayment depend on the repayment scheme. It is worth comparing payment schedules for different schemes and choosing the appropriate one.
6. The inclusion of bank commissions in the calculation should also not be neglected. Commissions can be set either as a percentage of the loan amount or as a fixed amount. In addition, the commission may be charged at different intervals – once, once a year or every month. This clause can increase your mortgage payment.

After filling out all lines and performing calculations, the client will have access to the following data:

• payment amount;
• commissions;
• overpayment in monetary terms;
• overpayment as a percentage of the loan amount;
• the amount of interest paid over the entire loan term;
• total amount to be refunded.

All this data is formed into a table, which can be saved for convenience and used in the future to compare offers from different banks.

Calculation scheme

How to correctly calculate mortgage payments for a person who has never encountered this type of lending? It is worth considering that repayment of any loan will consist of several parts:

• repayment of the loan body, i.e. payment of the amount received by the borrower;
• payment of interest.

The calculation of payments depends on their type. Today there are two calculation schemes:

1. Differentiated. The loan body is repaid in equal parts, after which the amount of interest decreases each time. They depend on the balance of the debt. Therefore, the payment amount will be different every month. How to calculate the monthly payment in this case? The payment amount is calculated as the sum of the loan body and the interest accrued on the remaining debt. At the end, the size of the monthly payment (MP) will decrease significantly.
2. Annuity. In this case, the overpayment is returned unevenly, since at the initial stage most of it has to be paid on the interest part, and less on the loan body. Thus, by the middle of the loan repayment period, the borrower pays off a smaller portion of the loan itself. But the monthly payment does not change until the end of the repayment period. The amount of the principal debt decreases slowly, which is why overpayment occurs. You can calculate a mortgage according to this scheme by calculating the interest amount accrued for a given period and the amount to repay the loan body.

The formula for calculating a mortgage using an annuity scheme is not simple. Therefore, it is problematic to determine how much overpayments will differ for each of the repayment systems for the same amount. But often the overpayment under a differentiated scheme is much less.

Calculation formulas

Each scheme has its own formula. How is a mortgage payment calculated using an annuity schedule? There is a formula for this:

X = (S*p)/(1-(1+p)^(1-m)),

where X is the monthly payment, S is the entire loan, m is the loan term, p is the interest rate.

Knowing all the details of the loan, you can calculate the amount to repay each month.

How to independently calculate payments when buying an apartment with a mortgage using a differentiated system? You can correctly calculate the amount using the formula:

X=(O/m)+(O*r*d)/Dg,

where O is the balance of the debt as of the calculation date, m is the number of months, p is the loan rate as a percentage, d is the number of days in the billing month, Dg is the number of days in the year.

Using these formulas, you can calculate the monthly repayment amount for any scheme. But many people are interested in an important question: how to calculate the overpayment on a mortgage?

To do this, you need to multiply the result obtained from the formula by the number of months of lending and subtract the initial loan amount from the result. By following the appropriate steps, you will find the answer to your question.

If you don’t want to calculate on your own, then use the services of online calculators, which are available on the official websites of each bank. How to calculate and get the correct answer on such a calculator? It is enough to enter information about the amount of debt, the loan term and overpayment at the annual rate, and the frequency of repayments. This way you can calculate the interest on your apartment mortgage. Having calculated all the points in advance, you can decide on your own capabilities.

What about the tax deduction?

How to calculate the tax deduction when buying an apartment? Many borrowers are concerned about this issue. If we are talking about the buyer, then after receiving ownership rights, a deduction can be obtained both for the cost of the apartment and for the mortgage interest.

At the same time, no matter how much the housing costs, only the amount of 2 million rubles will be taken into account, plus no more than 3 million rubles for overpayment.

Thus, the maximum you can get is 260 thousand from the value of the property and 240 thousand from the rate. To make getting a real estate loan profitable, you need to weigh the pros and cons. Consider all rate options for different banks, pre-calculate the amount, overpayment and decide on this type of loan carefully, so that you don’t have to overpay again and regret the purchase.

Annuity and differentiated payment

As already mentioned, the calculator allows you to choose a repayment scheme. When choosing annuity payments, the schedule will reflect equal amounts of monthly payments for the entire term of the mortgage. At first, most of this money will go to pay off interest to the bank, but every month this amount will decrease, and payments will mainly repay the principal debt.

Differentiated payment is more profitable from the point of view of overpayment. Each payment includes part of the debt and the amount of interest for the month. By repaying the debt, the amount of interest decreases, and therefore the total amount of payment. The disadvantage of this repayment scheme is that there are no fixed obligations; their amount changes monthly, which can cause difficulties in budget planning.

Sberbank mortgage calculator

Considering the tool using the example of Sberbank's mortgage calculator, the convenience of the service becomes obvious. The calculator makes it possible not only to calculate the amount of a mortgage at Sberbank, but also to get acquainted with the bank’s special programs and services that affect the interest rate, and therefore the overpayment on the mortgage. The following will help you lower your rate:

• life insurance;
• purchasing real estate through the DomClick service;
• availability of a salary card;
• the “Young Family” program;
• electronic registration of property rights;

Popular mortgage programs

Banks are fighting for customers and strive to offer favorable mortgage lending conditions for selected categories of citizens. Mortgage programs combine conditions that suit the client according to his characteristics and requirements, offering a profitable result. Mortgage programs are offered by all banks; they can be grouped according to the following criteria:

1. Programs depending on the type of property. The interest rate and the required minimum payment may depend on the choice of housing under construction or an existing owner.
2. Programs for the military. The military is a separate category of citizens who have special mortgage conditions. A program for them is provided in most banks.
3. Programs for families. There may be mortgage benefits for families with children, for those who participate in government programs or use maternity capital.
4. Programs for the acquisition of country real estate, non-residential premises, and the construction of a house also have special conditions that should be clarified.
5. Refinancing an existing mortgage from another bank is also possible - this is a separate preferential program.

Mortgage programs allow you to save money when applying for a real estate loan, so you should carefully read them and choose the right one.

Interest rates and mortgage terms

Before choosing a bank with which to enter into a mortgage lending agreement, you need to compare the offered conditions. The minimum rate for state support is 6%. The average mortgage rate without government programs is 10-12%. The calculator will help in calculating the payment schedule depending on the rate, and the user will be able to evaluate the benefits.

In addition to the rate, banks set requirements for a minimum down payment, limit the available loan period and request various packages of documents necessary to draw up an agreement. Each of the conditions can be decisive when choosing a bank, and non-compliance with any requirements can cause refusal. It is recommended to use a mortgage calculator to find out the nuances in advance in order to finalize a profitable deal in a short time.

Table of mortgage interest rates in reliable banks:

Counting Information

We figured out the types of payments. I can't wait to find out how to calculate my monthly mortgage payment. To do this, it is necessary to take into account several factors:

1. The price of the property – the higher it is, the larger the monthly payment.
2. The loan term - the longer it is, the lower the monthly payment, but the interest for using the loan will have to be paid longer.
3. Solvency of the borrower – it is believed that the monthly payment amount should not exceed 40% of income.
4. Interest rate on the loan - the exact rate can be found after submitting an application in the loan offer or take the average bank rate.