Lesson Fixed Rate Mortgage Payment

Algebra ->  Finance -> Lesson Fixed Rate Mortgage Payment      Log On


   

This Lesson (Fixed Rate Mortgage Payment) was created by by PrateekJain(0) About Me : View Source, Show
About PrateekJain:
Fixed Rate Mortgage Payment Calculation

In FRMs, the interest rate over the entire term of the <mortgage is fixed, and repayments are made in equal installments in every period (usually monthly).

The fixed monthly payment can be calculated as follows:

Let:

P = principal amount borrowed
r = annual interest rate, compounded monthly
N = term of the loan in years
n = number of monthly payments = N*12
EMI = fixed monthly payment
Then:

EMI+=+%28P%2Ar%29+%2A+%281%2Br%2F12%29%5En%2F%28%281%2Br%2F12%29%5En-1%29


For example, consider Principal = $100000, interest rate = 7%, and time period = 30 years = 360 months. The formula would then be




This would give the value of EMI as $665.3.
Also see: Corporate Finance: Calculate Equal Monthly Installments (EMI)
This lesson has been accessed 16887 times.